India Audit Regulator Recommends Revision In Quality & Auditing Standards
Institute of Chartered Accountants of India expresses disagreement over these revised standards, which will become effective from 1 April 2026
(The Corner Office Journal) -- India’s National Financial Reporting Authority (NFRA) has recommended a revision in the quality and auditing standards on the lines of the global standards.
The development came after the audit regulator held a meeting on 11 and 12 November and approved its standards on quality control, the Ministry of Corporate Affairs (MCA) said in a statement.
NFRA recommended to revise the Standard on Quality Control (SQC1) as Standards on Quality Management (SQM 1 and SQM 2) on the lines of the global Standards on Quality Management (ISQM1 and ISQM2), with minor contextual changes, to the government, it added.
The regulator also suggested to revise the Standard on Auditing (SA 600) on the lines of the global Standard ISA 600, with some minor contextual changes.
The revised SA 600 and relevant conforming adjustments in the other SAs are proposed to be applicable only to public interest entities except public sector banks, public sector undertakings (including public sector insurance companies) and their branches, respectively, according to the statement.
In addition, NFRA recommended conforming adjustments with the revised SA 600 in the liability of joint auditors under SA 299 for consistency by making the joint auditors jointly and severally responsible, on the lines of the standard international practices.
The regulator also recommended to the government to revise the three SAs -- SA 800, SA 805 and SA 810 -- and notify the same under Section 143(10) of the Companies Act 2013.
SA 800 is related to the Special Considerations-Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks. SA 805 is related to the Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, while SA 810 is related to the Engagements to Report on Summary Financial Statements).
The MCA said out of 11 members of NFRA attending the meeting, eight members -- the representatives of the Comptroller and Auditor General (CAG), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), two independent experts, two full-time NFRA members and NFRA chairperson supported these four proposals.
The three representatives of the Institute of Chartered Accountants of India (ICAI), however, expressed their disagreement to these four proposals.
The government said NFRA also approved the other 33 auditing standards on lines of corresponding global standards. In line with the practice followed globally in countries such as UK, Australia, Singapore, the authority also recommended to the government to name the auditing standards as IndSAs, it noted.
Following the government approval, these standards will become effective from 1 April 2026, according to the statement.
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