ICAI seeks pause on change in key audit rule

NEW DELHI: The Institute of Chartered Accountants of India (ICAI) on Friday asked regulator National Financial Reporting Authority (NFRA) to pause the proposed changes in the auditing standard SA 600 related to group audits, possibly setting the stage for a confrontation.

In a statement, ICAI argued that the move by NFRA came as a surprise and sought more time for comprehensive review and discussions with all stakeholders. Sources countered ICAI's claim, saying that the issue has been pending since 2009 and NFRA has been raising the matter periodically, starting with 2020, which was followed by another request in 2021. Even in April 2024, the issue was flagged to ICAI, which had sought time to study the proposal, said a source, adding that for 15 years, the agency was in "permanent pause mode" on the issue.

"The ICAI Council, in its meeting held on Sept 17, 2024, expressed its view that while the current SA 600 has been effective and has stood the test of time, there is room for further review and strengthening to better serve public interest. The Council has tasked the Auditing and Assurance Standards Board with this review and start the process of reviewing the standard for exposure as has been the practice in ICAI," the agency, which regulates bulk of the auditors in the country, said, adding that NFRA's consultation paper was issued on the same day as the council meeting. It said it will send inputs after consultation process is completed.

The NFRA paper, sources said, has addressed several of the issues that was flagged by ICAI. NFRA, which was set up after enactment of Companies Act 2013, was not notified for several years, with govt blaming it on intense lobbying by ICAI.