New Delhi: The National Financial Reporting Authority (NFRA) on Monday recommended auditing standards for private limited companies (LLPs), although the Self-Regulatory Institute of Accounting and Auditing of Chartered Accountants of India (ICAI) has expressed reservations over some of the proposals, the Ministry of Corporate Affairs said in a statement.

The ministry said in a statement regarding Monday’s NFRA meeting that these norms will come into force from April 1, 2026 after approval by the Union government.

The proposed standards are similar to those already recommended by the NFRA for businesses. The NFRA had earlier this month recommended revised auditing standards for notifiable companies, with changes to some of the standards issued by the ICAI, despite the accounting body’s objections to some of the changes, Mint reported on November 12.

The ICAI’s concern is that the proposed revisions in the auditing standard for consolidated financial statements of groups of companies could lead to concentration of the audit market around large audit firms to the detriment of others listeners, Mint reported on November 14. Audit concentration refers to the fact that a large portion of the audit market is farmed out to larger audit firms, a trend seen in economies such as the United States and the United Kingdom.

The NFRA, established in 2018, took the lead in revising auditing standards and notifying them as government rules under the Companies Act, a requirement which was enshrined in law in 2013.

The new Companies Act, 2013 requires ICAI auditing standards to be notified as government rules in consultation and following recommendations of the NFRA.

Forty auditing standards

The ministry said the NFRA decided on Monday to recommend that the 40 auditing standards and related standards on quality control, which were finalized by the NFRA during its two-day meeting earlier this month for the audit of companies, are also applicable to the audit of LLPs, with necessary changes.

The NFRA has a 12-member board of directors, three of whom are from the ICAI. Of the eight NFRA members participating in the meeting, seven including representatives of the Comptroller and Auditor General of India (CAG), RBI, two independent experts, two full-time NFRA members and Chairman Ajay Bhushan Pandey, were in favor of the proposal. said the press release.

The statement said that ICAI members also “supported the proposals, subject to their reservations”, regarding quality control standards and auditing standards dealing with group financial statements (SA 600), joint audits ( SA 299) and financial statements prepared according to special frameworks (SA800). , individual financial statements and account items (SA 805) and summary financial statements (SA 810).

These reservations, specifies the press release, are those that they previously expressed about the company auditing and quality management standards, finalized at the last meeting and which were reiterated on Monday in the case of the audit limited liability companies.

Email queries to the ICAI seeking comments on the article remained unanswered at the time of publication.