The CA Institute has constituted a 16-member group to guide the Central Council on the issues around NFRA’s proposed changes to a key auditing standard SA 600 on ‘Using the Work of Another Auditor’.
This group is expected to present a report, and a note for the consideration of the ICAI Central Council, which is to meet on September 17 to discuss the situation, and decide the next course of action, sources close to the development said.
The group, which includes at least four former ICAI Presidents and past AASB Chiefs, is being headed by Debashis Mitra, former ICAI President, they added.
Realignment to international accounting standard
National Financial Reporting Authority (NFRA) wants Institute of Chartered Accountants of India (ICAI) to bring changes to its two decades-old SA 600, so as to align it with the international accounting standard (ISA600).
Aligning it with ISA600 would mean CA Institute allowing the principal auditor to access the working papers of audit of component auditors of subsidiaries of corporate group. Also, the principal auditor (auditor of a holding company in corporate group) would have to own and take responsibility for the actions of the component auditors.
Both ICAI and NFRA are not on the same page on the issue of SA 600 changes. NFRA wants to go ahead to bring changes if ICAI is not moving on the matter. Already NFRA has indicated it would bring a consultation paper on the issue and expose it for public comments before sending it to the Corporate Affairs Ministry (MCA) for notifying the revised auditing standard.
‘Virtually may kill majority of 96,000 CA firms’
Institute of Chartered Accountants of India (ICAI) President Ranjeet Kumar Agarwal had recently told businessline that CA Institute is not in favour of any ‘refresh’ to the two decades-old SA 600 that would lead to concentration of audit market only in few hands. He had then said that NFRA plan would affect small practitioners and virtually kill majority of 96,000 CA firms in the country. India cannot “afford” to allow audit market to be concentrated in the hands of few firms, according to Agarwal.