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The Institute of Chartered Accountants of India (ICAI) is in a standoff with the National Financial Reporting Authority (NFRA) over a proposed revamp of the auditing standard SA 600, which deals with the "Use of the Work of Another Auditor." A special Central Council meeting of the ICAI has been scheduled for September 17 to thoroughly debate this matter, which could reshape the auditing landscape in India. The conflict stems from NFRAs plan to mandate that the principal auditor (typically the
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FAQ :
The disagreement centres on the NFRA's proposal to make principal auditors fully responsible for the work of component auditors under audit standard SA 600, a change the ICAI believes will negatively affect small firms.
SA 600 is an auditing standard that deals with the 'Use of the Work of Another Auditor', particularly relevant in corporate groups where a principal auditor oversees the work of component auditors.
The NFRA's proposed changes are intended to address shortcomings in the current auditing system, which were exposed by high-profile corporate failures like DHFL and IL&FS, aiming to improve accountability.
The ICAI is concerned that the proposed changes will disproportionately impact small CA firms, potentially leading to a concentration of audit work among larger firms and harming competition and the livelihoods of small practitioners.
While not explicitly stated as an alternative, a former ICAI President suggested that principal auditors should only request working papers on critical areas, not the entire audit, as a potential compromise.
The ICAI has scheduled a special Central Council meeting for September 17 to thoroughly debate the proposed overhaul of SA 600.
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