NEW DELHI: In a major overhaul, the National Financial Reporting Authority (NFRA) on Tuesday cleared 40 audit standards, including six where the Institute of Chartered Accountants of India (ICAI) had raised objections.
After detailed discussions, NFRA board voted eight-three for aligning several audit standards (SA) with global norms and recommended the notification of standard on quality control (SQM) by govt. While NFRA members and chairman and representatives from CAG, RBI and Sebi as well two independent experts on the board of the regulatory body supported the revision of SA 600, SA 805, SA 800 and SA 299, the three ICAI representatives opposed the move.
This was despite legal opinion suggesting that ICAI had no powers for notification, and the final notification must be done by the ministry of corporate affairs based on a recommendation by NFRA. Tuesday’s decision is also likely to end ICAI’s efforts to claw back some of the powers it had lost to NFRA after govt belatedly notified the agency under the Companies Act.
In a statement, NFRA said that SA 600 has been aligned with international standards, and will apply to public interest companies, except public sector entities and branches of state-run banks.
In the case of SA 299, where global standards are unavailable, NFRA has sought to deviate from the norms for joint audit used in France, Germany, South Africa and Singapore. Instead of making auditors jointly and severally responsible, ICAI had sought to make Indian auditors individually responsible, which makes it tough for the regulators to fix responsibility in case of wrong doings.