NEW DELHI: Chartered accountants’ apex body ICAI on Friday asked regulator NFRA to pause the proposed changes in the auditing standard SA 600 pertaining to group audits, saying the move came as a surprise and sought more time for comprehensive review and discussions with all stakeholders.
ICAI and NFRA are on different pages on revising the Standard of Auditing (SA) 600 which is applicable in the case of audit of companies which have subsidiaries and associates. Broadly, the holding company is audited by a principal or main auditor and the subsidiaries and/or associates by other or component auditors.
While the National Financial Reporting Authority (NFRA) has mooted changes to the standard citing several cases of corporate frauds and audit failures/deficiencies in recent times, ICAI is of the view that the revision could adversely impact small and medium CA (Chartered Accountant) firms.
In a detailed statement about NFRA’s consultation paper issued on September 17, the Institute of Chartered Accountants of India (ICAI) on Friday called for a pause in the revision process to allow for a comprehensive review and discussion with all relevant stakeholders.
The institute’s central council, on September 17, expressed its view that while the current SA 600 has been effective and has stood the test of time, there is room for further review and strengthening to better serve public interest, according to the statement.
The council has asked the Auditing and Assurance Standards Board (AASB) to review the matter.
“Unfortunately, while this issue was still being discussed in the aforesaid meeting of the council, NFRA has come out with an exposure draft of SA 600 for revision inviting public comments on the same day which has come as a surprise to the institute,” the statement said.
At present, the 2002 version of SA 600 prepared by ICAI is in force.
Since all CAs are its members, ICAI said that it ensures uniform standard of qualification and professional competence.
“Given this uniformity, ICAI believes it is neither possible nor desirable for the group auditor to assess or exercise control over the decisions of a component auditor who is equally qualified,” it noted.
Further, ICAI said that under the existing SA 600, the group auditor already has the power to specify to what extent he relied on component auditor reporting and can seek further clarification or justification from the component auditor, if required.
With inputs from PTI
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