NFRA’s move on “SQM” norms needless: ICAI
December 24, 2024
On the issue of Byju's,Agarwal said that the matter has been referred by the the disciplinary directorate to the disciplinary committee of the ICAI.
The National Financial Reporting Authority’s (NFRA’s) move to notify the standards on quality management (SQM) through the ministry of corporate affairs (MCA) is unnecessary, said Ranjeet Kumar Agarwal, president of the Institute of Chartered Accountants of India (ICAI).
“SQM is a revised version of SQC (standard on quality control) which is currently in force. The SQC, which has not been notified, is already applicable on CA firms, but NFRA is of the opinion that it should be notified as auditing standards. That’s the point of contention. We believe that these are not auditing standards, and there’s no need to notify them through the ministry,” Agarwal told FE.
Recently, the NFRA has recommended 40 standards on auditing (SAs) and SQM-1 and SQM-2 to MCA for notification. Agarwal said that the SQM recommended by the NFRA are exactly the same which were released by ICAI in October. “We floated the exposure draft, invited the comments, and finalised the SQMs. NFRA has adopted the same SQMs which are aligned with the global standards. We are already maintaining the auditing quality.
Even after notifying, the quality will remain the same,” he said. NFRA maintains that SQMs need to have a legal backing and also be aligned with the global quality standards. Hence, the regulator recommended these standards to the MCA for notification.
Agarwal said that there are 12 standards – other than 35 SAs – that come directly under its domain, including the SQM-1 and SQM-2. SQM 1 deals with a CA firm’s responsibilities to design, implement and operate a system of quality management for audits or reviews of financial statements, SQM 2 talks about the appointment and eligibility of the engagement quality reviewer and the review process.
Meanwhile, Agarwal said that the institute is currently in the process of finalising the international networking guidelines for the domestic CA firms. “The guidelines will come out in this fiscal,” he said. These guidelines will enable CA firms to partner with global firms and grow in size and scale.
Though the current stance of ICAI is against such global affiliations. For instance, in 2024, the institute has taken action against PwC (and its domestic affiliates), SR Batliboi & Co (and its domestic affiliates) for maintaining international affiliations with their global network firms.
On the issue of Byju’s,Agarwal said that the matter has been referred by the the disciplinary directorate to the disciplinary committee of the ICAI. “The matter is under investigation, and we are expecting a decision shortly,” he said.
[The Financial Express]
