NFRA begins audit standards overhaul

Review of ICAI's 38 audit standards, plus two quality standards

- Gireesh Chandra Prasad

The National Financial Reporting Authority (NFRA) has kicked off an epic overhaul of the way auditors verify the truthfulness of corporate financial information, in a change of regime from the current system where auditing standards issued by the Institute of Chartered Accountants of India (ICAI) are deemed to be final.

According to two persons familiar with the development, NFRA has begun the revision of all audit and quality standards issued by ICAI, as the Centre seeks to align them with global practices. The authority, which has three ICAI representatives on its board, will submit the revised standards to the corporate affairs ministry for notification.

Out of ICAI's 38 audit standards, NFRA has already started work on revising SA600, which pertains to consolidated financial statements of business groups. According to one of the two people cited above, the authority has also started work on revising the remaining 37 audit standards, plus two other standards on quality management issued by ICAI.

"The central government has asked (NFRA) for expediting the process of notifying audit standards, and NFRA is duty-bound to do that," the person cited above said on the condition of anonymity.