In NFRA Versus ICAI, audit standards upgrade on cards

The tug of war between the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI) over the need to revise India's auditing standards to align with global norms has further intensified.

- RUCHIKA CHITRAVANSHI

This follows the ICAI introducing new quality management rules without taking NFRA of the Corporate Affairs ministry on board.

The proposed adoption of revised International Standards on Auditing (ISA) 600 has become a focal point in the dispute between the two regulators. Several auditors, particularly in large audit firms, support the move, viewing it as essential to strengthen audit quality and enhance trust in financial statements. They argue that this should take precedence over narrow interests.

The revised standards deal with special considerations in the audit of group financial statements, asserting that the Group Auditor holds ultimate responsibility for the audit. Under these standards, the Group Auditor would also evaluate the component auditor's communications and the adequacy of their work. NFRA has invited public comments on the revisions until October 30 and is expected to notify the new standards for applicable companies after its next board meeting in November.

The revised standards deal with special considerations that apply to an audit of group financial statements. The revised standards hold that the Group Auditor is ultimately responsible for audit. Group auditor under revised standards would also evaluate the component auditor's communications and the adequacy of their work. The NFRA has invited public comments on the revisions until October 30. Sources said NFRA is likely to notify the new standards for applicable companies after its next board meeting in November.