India Set to Introduce New Audit Standards Amid Regulatory Dispute

Original: India may soon notify new audit standards after prolonged regulatory tussle

The Economic Times•Apr 3, 20262 min

In a Nutshell

India's corporate affairs ministry is poised to announce a new audit regime that aligns with global standards, following a prolonged dispute between the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI). The new standards, including a contentious revision of Standard on Auditing (SA) 600, aim for implementation by April 2026.

Key Points

01New audit standards are expected to align Indian regulations with global benchmarks.
02Implementation of the new standards is proposed for April 2026.
03A major point of contention is the revised Standard on Auditing (SA) 600.
04ICAI's objections to NFRA's recommendations highlight the ongoing regulatory tussle.
05Discussions on Standards on Quality Management (SQM 1 and SQM 2) are also ongoing.

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Full Summary

The corporate affairs ministry in India is preparing to notify a new set of audit standards, which aims to align local regulations with international benchmarks and resolve ongoing disputes between the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI). A meeting held recently focused on finalizing these standards, which NFRA had previously recommended in November 2024, with a proposed implementation date of April 2026. The primary contention arises from the revised Standard on Auditing (SA) 600, which NFRA suggests would make the principal auditor accountable for the entire group's financial statements. ICAI opposes this, arguing it would disadvantage smaller audit firms. Additionally, discussions are taking place regarding the Standards on Quality Management (SQM 1 and SQM 2), with NFRA advocating for their notification as auditing standards, while ICAI contends they are quality management frameworks, thus falling under its jurisdiction. The outcome of these deliberations could significantly impact the auditing landscape in India.

Key Figures

40

Number of auditing standards recommended by NFRA

April 2026

Proposed implementation date for the new standards

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Why It Matters

The new audit standards could reshape the auditing landscape in India, potentially affecting the operations of audit firms, especially smaller ones.

Who is affected

Audit firms, particularly small and mid-sized firms, as well as stakeholders relying on financial audits.

What to know

Audit firms should prepare for changes in compliance requirements and assess their operational strategies in light of the upcoming standards.

FAQ

The new audit standards are proposed for implementation starting April 2026.

The primary dispute centers around the revised Standard on Auditing (SA) 600, which NFRA wants to enforce, but ICAI believes it favors larger firms over smaller ones.

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