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In a recent council meeting held on September 17, 2024, members of the Institute of Chartered Accountants of India (ICAI) expressed differing opinions regarding the way forward on the proposed revision of the Standard on Auditing (SA) 600, sources told ETCFO.
A former ICAI president suggested that the institute should consider filing a writ petition against the National Financial Reporting Authority (NFRA). However, several council members opposed this approach.“We need to focus on constructive dialogue rather than legal action,” said a member, according to individuals familiar with the matter.
An ICAI source confirmed that the council explored the legal options available and expressed willingness to pursue legal action if necessary. While the former president suggested filing a writ against the NFRA, he did not comment on the differences of opinion and stated that the council remains united.
Legal opinion under consideration
According to sources familiar with the discussions, ICAI is planning to seek legal opinion on this matter.
On September 20, ICAI held a press conference announcing a pause in the revision process for SA 600, expressing surprise over NFRA’s simultaneous release of an exposure draft while discussions were ongoing within the ICAI Council.
“Unfortunately, while this issue was still being discussed, NFRA released an Exposure Draft of SA 600 for revision, inviting public comments on the same day. This has come as a surprise to the Institute,” an ICAI spokesperson stated.
NFRA moves forward with revision plans
During the September 17 meeting, the ICAI Council acknowledged the effectiveness of the current SA 600 but noted significant room for improvement to better serve public interests.
The Council tasked the Auditing and Assurance Standards Board (AASB) with leading this comprehensive review. ICAI emphasized the importance of addressing the evolving needs within the profession and the public. However, despite these internal concerns, NFRA announced its intention to proceed with revising SA 600, which governs audit processes for companies with subsidiaries and associates, and opened a public consultation period for feedback, with comments due by October 30.
ICAI concern over proposed changes
ICAI raised significant concerns about the proposed revision of SA 600, particularly regarding the assessment of component auditor competence. They argued that the uniform qualifications mandated by the Companies Act, 2013, make such assessments unnecessary and impractical. Additionally, they expressed worries that the changes could disadvantage smaller CA firms, potentially leading to a concentration of audit work among larger firms and compromising the roles of smaller practitioners in the industry.
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