The National Financial Reporting Authority (NFRA) has released revised Standards on Auditing 600 (SA) to match the International Standards on Auditing (ISA 600). This is for public consultation to address “the severely deficient quality and serious lack of due diligence” found in group audits in India. The revised standards have been proposed by NFRA for audits of listed companies and public interest entities, except public sector enterprises, public sector insurance entities, public sector banks and their branches.
As per NFRA, more than 17,000 listed holding companies and their subsidiaries, including unlisted ones, would be under the ambit of the revised standards. Inherent complexity of group structures cannot be handled by the 2002 version of SA 600 currently practised in India. Internationally, these standards were revised in 2009. The primary reason for proposing adoption of a revised standard for group audits is to help safeguard public interest and investor protection, and the need for a standards framework that is robust enough to meet the challenges posed by complex financial systems today.
Group auditor under revised standards would evaluate the component auditor’s communications and the adequacy of his work.
However, ICAI is concerned that adoption of the ISA 600 will result in an unwarranted situation. It will lead to concentration of audit work with a few large firms. This will adversely affect small and medium practices, which is detrimental for growing economies like India.
Comments may be submitted by 30th October, 2024.
Click here to access NFRA Consultation Paper.
Click here to access the revised SA 600 draft.
