TFS Gulf 
- In the U.S., something interesting is happening in audit.
- AI-native platforms like Modus are investing in mid-market audit firms…and embedding AI directly into their workflows.
- Big question: Can this U.S. playbook work in India? If not…how will India’s mid-sized audit firms survive AI?
Audit a $50 billion market in the U.S.
In the U.S., audit is dominated by the Big 4s, who are building proprietary AI platforms.
Human judgment still leads, but execution is increasingly AI-assisted.
The result: Audits are faster, smarter, and cheaper.
So what about mid-market audit firms?
These firms are big enough to handle complex clients, but NOT large enough to build proprietary AI systems of their own.
They are caught between 3 difficult choices:
- Build AI systems internally → too expensive
- Buying tools from vendors → often leads to low adoption
- Do nothing → risk falling behind
This is the gap Modus is trying to exploit
Modus is founded by Arush Jain, Pranav Pillai and Vinay Kasat, with backgrounds across Thoma Bravo, Palantir and Citadel.
The company is built around a simple belief:
- In theory, firms can buy AI tools.
- But in practice, getting auditors to actually use them across teams and engagements is extremely difficult.
So Modus flips the model.
- Takes strategic ownership in mid-market accounting firms (As per its investor, Lightspeed Ventures’ press release)
- Deploys “Forward Deployed Engineers” directly into audit teams.
- Embed AI into the actual workflow
This is being described as the emergence of a “new AI-native audit model.”
What happens if this works?
According to insiders we spoke to:
Mid-market firms move closer to Big 4 capability: They suddenly get:
- AI capabilities
- Operational efficiency
- Margin expansion
Audit becomes a “tech-enabled service stack”
Ownership of audit economics will get fragmented: Today, audit profits flow almost entirely to the partners who built the firm.
In a Modus world, the economics get split between:
- Audit firm
- AI partner (like Modus)
- Possibly capital providers
Modus has already invested in a top-200 US accounting firm (that has $30 million in revenue).
In 2026, it plans to back multiple firms.
Also read: AI-agent for ‘Accountants’ raised $100Mn. Will it impact India’s offshore CPA firms?
But India can’t play this game
We spoke to a Top 20 CA Firm Partner. He said, “There is a big need for a Modus model in India, but Indian CA firms operate in a completely different reality.”
He added:
- No external ownership (regulatory restrictions by ICAI)
- Highly fragmented mid-market (According to ICAI, India has over 100,000 CA firms, but only 20 to 25 CA firms other than Big 4/6 handle large, complex audits.)
- Lower audit fees, tighter margins
India won’t see AI firms buying CA firms. But it will see:
- AI platforms partnering with firms
- Shared infrastructure models
- Workflow-level automation
Also read: Ex-Big 4 Leaders, AI & Private Equity are going to disrupt Tax Advisory?
Wrapping up…
India’s mid-tier firms are already competing on brand, talent and relationships…Now they also have to compete on tech.
They will get more squeezed as adopting AI needs a budget and scale.
And that’s not an easy game, especially when the Big firms already have:
- Capital
- Technology teams
- Access to global AI platforms
- Access to large global networks
Slowly but surely, Indian clients will start asking:
- Why is this taking weeks?
- Why isn’t this automated?
And once that happens…There’s no going back.
The question is: With no Big Daddy or Big money, can Indian Audit firms become AI-native?
Which leaves Indian CA Firms with one of three paths:
- Consolidation (Consolidate early enough to reach a scale where meaningful technology investment becomes viable, rather than trying to adopt AI tools individually on thin budgets.)
- Alliance formation
- Or gradual marginalisation
