The Ministry of Corporate Affairs is expected to roll out a new audit regime in the near future, aiming to harmonise India’s auditing framework with international benchmarks and resolve longstanding differences between key regulatory bodies.

The proposed overhaul is intended to bring clarity to the adoption of critical auditing standards that have remained under discussion due to differing views between the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI).

According to sources familiar with the matter, the government recently convened a high-level meeting involving senior officials from both NFRA and ICAI to deliberate on pending standards before formal notification. The discussions are part of a broader effort to eliminate regulatory uncertainty and ensure consistency in audit practices across the country.

The government, empowered under the Companies Act, 2013, holds the final authority to notify auditing standards. Officials indicated that consultations are ongoing with both NFRA and ICAI to finalise a cohesive framework acceptable to all stakeholders.

NFRA had earlier, in November 2024, submitted nearly 40 auditing standards to the government for consideration, proposing their implementation from April 2026. While there has been agreement on a majority of these standards, certain key areas have remained contentious.

A major point of divergence relates to the revised Standard on Auditing (SA) 600, which deals with group audits. NFRA has proposed assigning greater responsibility to the principal auditor for overseeing the financial statements of an entire corporate group. However, ICAI has raised concerns that such a move could disproportionately benefit larger audit firms while placing smaller and mid-sized firms at a disadvantage.

Despite these objections, NFRA has stood by its recommendations and submitted its version of the revised SA 600 to the government. ICAI, maintaining that its concerns were not adequately addressed, has also presented an alternative version of the standard.

The government is now tasked with reconciling these differences and issuing a final notification. The forthcoming audit regime is expected to not only streamline regulatory oversight but also enhance the credibility and global acceptance of India’s auditing practices.

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