ICAI working on audit quality norms to boost Indian firms' global standing

Quality parameters can be applied suo moto by ICAI's 80,000 member firms; best practices to include creation of supervising partner position, audit rotation, among others

The institute of chartered accountants of India (ICAI) is developing an audit quality maturity model to bring global standards for all its member firms and provide them with a score on achieving the required benchmarks. 

The quality parameters can be applied suo moto by the 80,000 member firms of the ICAI. 

“The idea is to improve the inherent capabilities of auditors...While a lot of the quality parameters are already there, we are putting things in black and white to help make our firms become globally competitive,” Atul Gupta, president ICAI said. 

Some of these best practices would include creating a position for a supervising partner, audit rotation among others. “Most big firms have these checks in place but in Indian context firms need to evolve so India can also have big audit firms in the future,” Gupta added. 

The institute has recently opened the Centre for Audit Quality at ICAI’s Centre of Excellence in Jaipur to ‘develop a systematic audit quality framework.’ 

“The Centre for Audit Quality will aim at the continuous investment in the contemporary education and training for prospective accountants and auditors, developing guidance and training programmes to assist audit teams and offices to undertake effective root cause analysis,” Gupta said. 

In a press statement, ICAI said India was on the cusp of a huge data revolution and it had become essential to advocate the position of the auditors to the various stakeholders to fill in the expectation gaps. 

“There is no set definition of a quality audit, and many factors influence audit quality. As a result, judging audit quality can be challenging and subjective,” the statement said. 

The auditing model is being designed on the basis of guidelines provided by the International Auditing and Assurance Standards Board. The quality indicators to be issued by the ICAI will be over and above the requirement to have a peer review and the financial reporting review by a third party. 

Its Centre of Audit Quality will also provide training to auditors in terms of developing professional skill sets, using technology, and improving digital competency in areas such as the safety of data. 

“This will improve the performance of auditors… We are institutionalising the standards for audit firms in India,” ICAI president said. 

ICAI may also give certifications to audit firms for their score on its quality parameters and evaluation of their competence, Gupta said.