ICAI to Discuss Changes to Auditing Standard SA 600

New Delhi, Aug 30 (PTI) The central council of the chartered accountants' apex body ICAI will discuss the changes proposed by regulator NFRA to auditing standard SA 600 on September 17 amid concerns in certain quarters about the suggested updates.

Standard on Auditing (SA) 600 broadly pertains to standards applicable in situations where a principal auditor of a company relies on the audit work done by another auditor for a group entity.

While the National Financial Reporting Authority (NFRA) has proposed aligning SA 600 with the relevant international standard, ICAI has flagged concerns about the changes as that could result in concentration of audit activities with a few firms, according to ICAI officials in the know.

At present, the principal auditor has to give a main audit report and a consolidated statement of the audit works done by other auditors for the group entities.

With the proposed changes to SA 600, the principal auditor of a company will also have the responsibility for the audit works done by other auditors for the group's entities. Such a situation, the officials said, could result in small and medium auditing firms losing out on audit work since the principal auditor could choose only a few firms.

Amid the concerns, the Institute of Chartered Accountants of India (ICAI), which has already given its observations to NFRA, will be discussing the issue next month.

ICAI Central Council will discuss the proposed changes to the standard during its meeting on September 17. "It is a larger issue and it has to be debated," the institute's President Ranjeet Kumar Agarwal said on Friday.

There are around 1.60 lakh practising chartered accountants in the country and about 96,000 small and medium auditing firms, as per one of the officials.

NFRA has the power to oversee the auditors of large as well as listed companies.

In some of its recent orders, NFRA had flagged that principal auditors did not ensure compliance with the requirements of SA 600 in letter and spirit.