NFRA pushes for global alignment in auditing standards

In a landmark move aligning India’s auditing practices with global standards, the National Financial Reporting Authority (NFRA) has recommended pivotal revisions to the Standards on Auditing (SA) 600, positioning the group auditor as the ultimate authority responsible for audits. This revision follows an extensive two-day board meeting and mirrors the International Standards on Auditing (ISA) 600. The proposal now awaits government approval and, if sanctioned, will take effect from April 1, 2026, marking a historic shift for India’s corporate governance framework.

The NFRA also endorsed an additional 33 auditing standards to ensure cohesion with global practices, signalling India’s commitment to strengthening transparency and oversight in financial reporting. NFRA Chairman Ajay Bhushan Pandey lauded the inter-regulatory effort, calling it “a historic moment for auditing and corporate governance in India.”

While most NFRA board members, including representatives from the Comptroller and Auditor General, Reserve Bank of India, and Securities and Exchange Board of India, were in favour, three representatives from the Institute of Chartered Accountants of India (ICAI) opposed aspects of the revisions, citing reservations about joint auditor liabilities and special audit considerations. Their dissent highlights ongoing debates over audit quality control and joint accountability.

The revised SA 600 standards will focus on public interest entities, including a broad range of listed firms, sparing only public-sector banks and certain public undertakings. For these entities, group auditors will be required to assess the quality of component auditors’ work, enhancing audit integrity and safeguarding stakeholder interests in a globally interconnected financial environment.