The proposed revisions are set to affect audits of listed companies and public interest entities. Credit: Lee Charlie/Shutterstock.

The National Financial Reporting Authority (NFRA) of India plans to review the revision of all 35 Standards on Auditing (SAs), including the SA600, during its board meeting scheduled for 11 and 12 November 2024.  

This move comes after NFRA’s initial proposal in September 2024, to revise SA600.

The same month, Institute of Chartered Accountants of India (ICAI) voiced concerns over the proposed revisions, urging a halt to the process. 

The ICAI highlighted the abrupt nature of the revised guidelines’ release by NFRA, pointing out that the usual process of setting up a review group and soliciting public feedback through exposure drafts before implementing changes. 

The latest board meeting is expected to be attended by representatives from the Reserve Bank of India, the Securities and Exchange Board of India, the Ministry of Corporate Affairs, and the ICAI. 

The NFRA’s recommendations on the auditing standards revisions, including those to SA600, will be submitted to the Ministry of Corporate Affairs.  

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The revised standards, once approved, will be officially notified by the MCA. 

The proposed revisions are set to affect audits of listed companies and public interest entities, with the exception of public sector enterprises, insurance entities, banks, and their branches.  

In total, 17,450 listed holding companies and their subsidiaries, including unlisted entities, could be impacted by these changes. 

NFRA has indicated that the complexity of group structures necessitates an update to SA600, which has remained unchanged since its 2002 version and is considered outdated.  

The international standard for SA600 was last revised in 2009. 

Moreover, NFRA is looking to reassess the Standards on Quality Management (SQMs) for audit firms and consider 16 ‘consequential’ changes to auditing standards previously introduced by the ICAI on 14 October.  

The NFRA has challenged ICAI’s authority to issue the SQMs, arguing that they are related to auditing standards and should be notified by the government following its recommendations. 

The ICAI, however, in a letter to the Ministry of Corporate Affairs last month, maintained that the quality management standards are separate from auditing standards, claiming the right to issue them independently of the NFRA’s approval.