NFRA chairman Pandey stresses the need to adopt global audit standards

Pandey said that NFRA is trying to educate people about the need for adherence to global standards such as ISA 600

India must adapt to local needs while meeting global requirements to strengthen its position as a global powerhouse, National Financial Reporting Authority (NFRA) Chairman Ajay Bhushan Pandey said on Thursday. 
 

“We have made our mark in the field of technology. The question now is whether we will make our mark in corporate governance, accountancy, and the auditing profession across the world,” Pandey said.
 

His comments came in the backdrop of the Institute of Chartered Accountants of India, the country's largest professional accounting body, seeking a pause in the revision process of auditing standards.
 

NFRA had on September 17 released revised Standards on Auditing 600 (SA 600) for public consultation, aligning them with the international standards (ISA 600). This aimed to address “severely deficient quality and serious lack of due diligence" in group audits in India. The proposed norms dictate that the group auditor of a firm would be held accountable for the financial statements of the company and its subsidiaries.  However, sources indicated that the ICAI was concerned that adopting ISA 600 could see audit work getting concentrated among a few large firms, negatively impacting small and medium practices in India.
 

Speaking at an Assocham event on Thursday, Pandey said that pathbreaking reforms often created doubts. “We shouldn't get deterred by the perceived emotion of pain. Can we afford to say that we are unique and won’t align with the world?” he asked.  

Pandey noted that Indian chartered accountants (CAs) could emerge as global leaders, similar to IT companies, but only if they aligned their practices with international standards.
 

He emphasised NFRA’s efforts to educate people about the importance of adopting global standards like ISA 600. “We must do it. The response we've received from audit firms, senior professionals, and corporate bodies indicates this is necessary to build trust,” Pandey added.
 

He highlighted that many of the reforms proposed by NFRA, which were in line with international reporting standards, had already been adopted in several countries. This would work to India's advantage, he said.
 

Referring to the Satyam scam, which led to amendments to the Companies Act, 2013, and similar global corporate law reforms, Pandey said: “One or two failures should not be brushed aside as isolated incidents. We must analyse them and take corrective action,” he said.
 

Pandey also noted that every order passed by NFRA or markets regulator Securities and Exchange Board of India (SEBI) demonstrated regulators taking cognisance of issues and correcting them.
 

“During the past few years, we have built confidence and trust in the system, working with the government, regulators, and corporations,” he said.