Institute of Chartered Accountants of India

ICAI operates a quality assurance (QA) review system through its Peer Review Mechanism, established in 2002 and overseen by the Peer Review Board (PRB). The mechanism applies to audit firms performing statutory audits and is designed to assess whether firms have appropriate systems of quality management and comply with applicable professional standards.

Peer reviewers are experienced members of ICAI who meet eligibility criteria, including relevant audit experience, and are subject to independence requirements. Reviewers receive training and conduct reviews using a combination of compliance-based and substantive approaches. Firms that meet the required standards are issued a Peer Review Certificate, while firms requiring improvement are provided with recommendations. Persistent non-compliance may result in referral to ICAI’s investigative and disciplinary mechanisms.

ICAI has developed supporting guidance and training for reviewers and continues to maintain and enhance the effectiveness of its QA system.

In addition to ICAI’s peer review system, quality assurance arrangements in India include oversight and inspection activities conducted by the Quality Review Board and the National Financial Reporting Authority for specified classes of entities.

Overall, ICAI maintains an established QA system and ongoing processes to support audit quality and compliance with professional standards, consistent with the requirements of SMO 1.

Current Status: Sustain

Under the Chartered Accountants Act, 1949, ICAI is responsible for establishing initial professional development and continuing professional development requirements for Chartered Accountants. ICAI has established a comprehensive education and training framework, including academic programs, practical experience requirements, professional examinations, and continuing professional development.

ICAI reports that its education framework is reviewed on a periodic basis and that updates to the International Education Standards (IES) are considered and incorporated where appropriate. The Revised Scheme of Education and Training has been designed with reference to the revised IES and includes updates across the Foundation, Intermediate, and Final levels. Enhancements have been made to curricula and assessment approaches, including the introduction of courses aimed at strengthening communication, technical, and professional skills.

ICAI has also developed systems to support ongoing professional development, including a CPD framework and online portals to facilitate access to learning opportunities. In addition, ICAI engages with stakeholders through outreach activities and participates in the international standard-setting process through review of exposure drafts and contributions to discussions on education standards.

While ICAI has implemented significant elements of the IES and continues to enhance its education framework, it is not demonstrated that all requirements of the IES in effect as of the time of the assessment have been fully incorporated. ICAI continues to review and improve its education and training framework in alignment with international standards.

ICAI is encouraged to continue its efforts to achieve full alignment with the latest International Education Standards across its IPD and CPD frameworks.

Current Status: Review & Improve

Under the Companies Act, 2013, auditing standards issued by ICAI and notified by the Ministry of Corporate Affairs are mandatory for the audit of financial statements in India. ICAI, through its Auditing and Assurance Standards Board (AASB), is responsible for developing auditing standards for application in the jurisdiction.

ICAI issues Indian Standards on Auditing (SAs), which are based on the International Standards on Auditing issued by the IAASB. Available information indicates that the standards are aligned with the 2016 ISA, with certain modifications to reflect national legal and regulatory requirements, and that not all standards (e.g., ISA 600) have been adopted.

ICAI has established a due process for the development and revision of auditing standards, including the formation of study groups, issuance of exposure drafts, public consultation, and approval by the ICAI Council prior to notification.

To support implementation, ICAI provides a range of activities including continuing professional development programs, seminars, workshops, implementation guidance, and e-learning modules. The institute also engages with regulators, government bodies, and academic institutions to promote awareness and understanding of auditing standards. In addition, ICAI participates in the international standard-setting process through review and comment on IAASB exposure drafts.

While ICAI has established robust processes for the adoption and implementation of auditing standards and continues to support their application, the standards in use are not aligned with the latest ISA as issued by the IAASB. ICAI continues to review and update its standards with a view toward further alignment with international requirements.

Current Status: Review & Improve

ICAI is responsible for establishing ethical requirements for Chartered Accountants under the Chartered Accountants Act, 1949. The institute has adopted a Code of Ethics that is aligned with the 2024 International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the IESBA, with modifications to reflect national laws and regulatory requirements.

ICAI supports the implementation of ethical requirements through a range of activities, including the dissemination of updates to members, continuing professional development programs, seminars, and conferences on ethics-related topics. The institute also maintains dedicated resources, including its Ethical Standards Board, to provide guidance and support to members on ethical matters and professional conduct.

In addition, ICAI participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IESBA.

Overall, ICAI has established and maintains a comprehensive system to support the adoption, implementation, and ongoing application of ethical requirements, consistent with the requirements of SMO 4.

Current Status: Sustain

In India, responsibility for public sector accounting standards rests with government authorities. The Comptroller and Auditor General of India, through the Government Accounting Standards Advisory Board (GASAB), develops Indian Government Accounting Standards (IGAS) for application at the Union and State Government levels.

ICAI does not have direct responsibility for the adoption of public sector accounting standards. However, the institute plays an active role in supporting the development and implementation of public sector accounting standards in the jurisdiction. ICAI provides technical input to GASAB and participates in its standard-setting activities, including promoting the transition toward accrual-based accounting frameworks.

At the local government level, ICAI, through its Committee on Accounting Standards for Local Bodies (CASLB), develops Accounting Standards for Local Bodies (ASLB), which are based on accrual accounting principles and draw on elements of IPSAS. These standards are developed in coordination with relevant government authorities and stakeholders and are designed to support the transition from cash-based to accrual-based accounting at the local level.

ICAI further supports implementation through training programs, seminars, and the development of educational materials for government officials, members, and students. The institute also participates in the international standard-setting process by reviewing and responding to IPSASB exposure drafts.

Overall, ICAI demonstrates an active and ongoing role in supporting the development and implementation of public sector accounting standards within the scope of its mandate.

Current Status: Sustain

Under the Chartered Accountants Act, 1949 (as amended), ICAI is responsible for establishing and operating an investigative and disciplinary (I&D) system for its members. The system includes formal mechanisms for the receipt, investigation, and adjudication of complaints related to professional misconduct.

ICAI’s I&D framework comprises the Director (Discipline), Board of Discipline, and Disciplinary Committee, which are responsible for investigating cases and determining appropriate sanctions. Sanctions may include reprimands, fines, suspension, or removal from membership. Decisions are subject to appeal through an Appellate Authority established under the Act.

In addition to ICAI’s system, the National Financial Reporting Authority (NFRA), established under the Companies Act, 2013 and operational since October 2018, has the authority to investigate and impose sanctions for professional misconduct by auditors and audit firms auditing specified classes of companies.

ICAI supports the effectiveness of its I&D system through ongoing awareness initiatives, including dissemination of information on ethical requirements, professional standards, and disciplinary procedures through continuing professional development programs and public communications.

Overall, ICAI maintains an established and operational I&D system, supported by a comprehensive legal framework and independent oversight mechanisms, consistent with the requirements of SMO 6.

Current Status: Sustain

Under the Companies Act, 2013, the Ministry of Corporate Affairs is responsible for prescribing accounting standards for companies in India. The Accounting Standards Board (ASB) of ICAI develops accounting standards, which are recommended for notification and granted legal authority through the regulatory framework.

India has implemented Indian Accounting Standards (Ind AS), which are based on and substantially converged with IFRS Accounting Standards issued by the IASB, with certain modifications to reflect national legal and regulatory requirements. Ind AS are required for listed companies and certain other classes of companies, while other entities apply accounting standards notified under separate frameworks.

ICAI has established due processes for the development and revision of accounting standards, including consultation with stakeholders and coordination with regulatory authorities. To support implementation, ICAI provides a range of activities including continuing professional development programs, seminars, technical publications, and dedicated support mechanisms such as implementation groups and helpdesks.

ICAI also monitors compliance with applicable accounting standards through its Financial Reporting Review Board and engages with regulators and other stakeholders to promote high-quality financial reporting. In addition, ICAI participates in the international standard-setting process through review and response to IASB exposure drafts and engagement in global and regional forums.

While India has achieved substantial convergence with IFRS through the implementation of Ind AS, IFRS Accounting Standards have not been adopted as issued. ICAI continues to support the development and implementation of accounting standards and to promote alignment with international standards within the jurisdiction.

Current Status: Review & Improve