ICAI Plans to Submit Own Auditing Standard Revision to Government Amid NFRA Row

The Institute of Chartered Accountants of India (ICAI) is preparing to submit its recommendations for a revised auditing standard, specifically Standard of Auditing (SA) 600, to the government. This move follows a disagreement with the National Financial Reporting Authority (NFRA), India's audit regulator for listed companies, which had previously proposed its own version of SA 600. ICAI feels its concerns were disregarded by NFRA when the latter aligned the standard with global rules last year. The apex accounting body argued that NFRA's proposed changes would primarily benefit large audit firms at the expense of smaller and mid-sized ones that form the backbone of India's audit sector. Conversely, NFRA contended that the revised standard would enhance audit quality in India. ICAI has formed a study group to finalize its proposed SA 600. The government, empowered by the Companies Act, will consider both recommendations from ICAI and NFRA's examination before notifying the final audit rules, which are proposed to be effective from April 2026.

**Impact** This news could lead to uncertainty in auditing standards for listed companies, potentially affecting compliance costs and the business strategy of audit firms, particularly small and mid-sized ones. It also highlights ongoing regulatory friction within the financial sector. Rating: 6/10.

**Heading: Difficult Terms and Meanings** * **Institute of Chartered Accountants of India (ICAI)**: The professional accounting body in India responsible for regulating the profession of Chartered Accountants. * **National Financial Reporting Authority (NFRA)**: An independent regulatory body established by the Indian government to oversee the auditing and accounting profession, primarily for listed companies. * **Standard of Auditing (SA) 600)**: An auditing standard that deals with the audit of group financial statements, including the responsibilities of group auditors and component auditors. * **Principal Auditor**: The auditor of a company's consolidated financial statements, who is responsible for the overall audit opinion. * **Component Auditor**: An auditor of a subsidiary or division (component) of a larger corporate group, whose work is reviewed by the principal auditor. * **Joint Audits**: An arrangement where two or more audit firms jointly conduct the audit of a company. * **Corporate Group**: A parent company and its subsidiaries, which are typically consolidated into a single set of financial statements.