The CA Institute, the world’s largest accounting and audit body, has approved the second version of Audit Quality Maturity Model (AQMM) that would be mandatory on audit firms of certain public interest entities. 

AQMM 2.0, developed by ICAI’s centre for audit quality, will be applicable on firms auditing a listed entity; or banks other than co-operative banks (except multi-state co-operative banks); or insurance companies. 

It maybe recalled that the AQMM v 1.0 , introduced in 2021, was made mandatory from April 1, 2023 to the firms auditing a listed entity; or banks other than co-operative banks (except multi-state co-operative banks); or insurance companies. However, firms doing only branch audits are not covered for thus exercise. 

The level of the firm obtained using AQMM v 1.0 was being reviewed by a peer reviewer and recorded on the website of ICAI against the validity of the firms’ peer review certificate.

There is no change regarding the applicability of AQMM v 2.0. Therefore, AQMM v 2.0 is also mandatory for firms auditing the version 1 covered entities, ICAI said. 

India is the only country where a separate model for self-evaluation of audit quality maturity has been introduced. There are about 96,000 audit firms in the country. A significant majority of these are proprietorships. 

A series of fraud events in Corporate India such as Nirav Modi scam in Punjab National Bank, the blowout of IL&FS, collapse of DHFL had shocked the nation and raised concerns over audit quality and the ability of statutory auditors to highlight corporate misconduct when they attest financial statements. This had prompted the ICAI to focus attention on audit quality and introduce self evaluation matrix for the audit firms.

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