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ICAI/CLCGC/06/2021-22/Rep-11 Shri Ashok Kumar Gupta Chairperson, National Financial Reporting Authority 7th- 8th Floor, Hindustan Times House 18-20 Kasturba Gandhi Marg, New Delhi - 110 001 Dear Sir, ICAI concerns are: (i) Returning of Revision of Existing Accounting Standards: Approach Paper (2020) prepared by ICAI by NFRA and (ii) Issuance of NFRA Consultation Paper on Statutory Audit and Auditing Standards for Micro, Small and Medium Companies We request your attention
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FAQ :
The ICAI is concerned about the NFRA's unilateral approach, particularly regarding the return of the ICAI's approach paper on revising accounting standards and the issuance of a consultation paper on audit standards for MSMCs without proper consultation.
The ICAI firmly believes that mandatory statutory audits for MSMCs should remain in place, as they are crucial for financial reporting integrity, corporate governance, and preventing risks like unaccounted transactions and fund misuse.
Yes, the ICAI believes there is a need for a separate set of Auditing Standards for MSMCs, or for the existing standards to incorporate scalability, to address the compliance costs and specific needs of smaller entities.
The ICAI has been working on revising accounting standards to converge with IFRSs for larger entities and to develop a simplified set for smaller companies, aiming for better financial reporting quality.
The ICAI proposes that the NFRA's consultation paper on statutory audit and auditing standards for MSMCs be withdrawn and deliberated upon in a full meeting of the NFRA members, with a collaborative approach.
The ICAI believes that proposals regarding accounting and auditing standards, including exemptions from statutory audits, fall under the purview of the NFRA Board and should be deliberated there, not just by the executive body.
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