New Delhi, Apr 4 (KNN) The Corporate Affairs ministry is expected to soon notify a revised audit regime aimed at aligning India’s auditing framework with global benchmarks. The move is also likely to resolve long-standing differences between the country’s two key audit regulators.
Officials on Wednesday said the ministry recently held discussions with senior representatives of the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI) to finalise the standards before notification, ET reported.
As per the Companies Act, the government holds the final authority to notify auditing standards after considering recommendations from ICAI and examination by NFRA.
Around 40 auditing standards had been recommended by NFRA in November 2024, with implementation proposed from April 2026.
Dispute Over Key Audit Standard
While both regulators agreed on most standards, differences emerged over Standard of Auditing (SA) 600 and related changes. NFRA’s revised proposal makes the principal auditor responsible for the entire group’s financial statements.
ICAI opposed this provision, arguing it could disadvantage small and mid-sized audit firms in favour of larger players. NFRA, however, rejected this concern and retained its position while submitting recommendations to the ministry. The institute also submitted its own version of the revised SA 600, maintaining that its objections were not adequately addressed.
Debate on Quality Management Standards
Another area of disagreement relates to the treatment of Standards on Quality Management (SQM 1 and SQM 2). NFRA considers these as auditing standards requiring government notification, while ICAI views them as internal quality frameworks within its domain.
ICAI had notified these standards in late 2024 to replace existing norms from April 2026 but has since deferred their implementation pending clarity.
Notification to Bring Clarity
The ministry’s upcoming notification is expected to settle these regulatory differences, including the scope and authority over various standards.
It is also likely to bring greater clarity and consistency to India’s audit framework, which comprises 47 standards across auditing, quality management, and assurance services.
(KNN Bureau)
