The Institute of Chartered Accountants of India (ICAI) has issued a revised announcement widening the mandatory applicability of the Audit Quality Maturity Model (AQMM) for audit firms.
The clarification, issued as a partial modification to its earlier announcement dated August 11, 2025, expands the scope of AQMM reviews to include more practice units engaged in high-value and public interest audits.
The ICAI has confirmed that AQMM will now apply not only to firms auditing listed entities but also to those auditing holding, subsidiary, associate entities, and joint ventures of listed companies, banks (excluding co-operative banks, except multi-state co-operative banks) and insurance companies subject to Peer Review
However, firms conducting only branch audits remain outside the scope of this requirement.
The revised framework introduces a phased rollout under AQMM Version 2.0:
Phase 1 – Effective April 1, 2026
Applicable to:
- Firms subject to Peer Review auditing:
- Listed entities
- Banks (other than co-operative banks, except multi-state co-operative banks)
- Insurance companies
- Firms (Practice Units) undertaking statutory audits of unlisted public companies meeting any of the following thresholds:
- Paid-up capital of ₹500 crore or more
- Annual turnover of ₹1,000 crore or more
- Outstanding loans, debentures, or deposits of ₹500 crore or more (as of March 31 of the preceding financial year)
Phase 2 – Effective April 1, 2027
Applicable to:
- Firms auditing entities raising funds exceeding ₹50 crore from:
- Public
- Banks or financial institutions
- Audits of body corporates and trusts falling under public interest entities
The expansion of AQMM applicability marks a decisive step by ICAI toward reinforcing audit discipline and transparency. As the phased implementation begins in April 2026, audit firms across India will need to gear up for stricter quality benchmarks and compliance requirements.
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