The National Financial Reporting Authority on Tuesday proposed new auditing standards (SA 600) for listed companies. The proposal aims to hold the "lead auditor" of business groups accountable for the consolidated financial statement, even when subsidiaries are audited by different auditors.
This move aligned with global norms, as the NFRA noted that the current standards, which are over two decades old, are not suitable for today's complex financial transactions and institutions.
The NFRA in its board meeting approved 33 auditing standards and recommended implementing them from April 1, 2026, pending government approval. The revised SA 600 standards focus on audits of group financial statements, making the group auditor responsible for evaluating the adequacy of component auditors' work.
The proposed norms would affect approximately 17,500 listed holding companies and their unlisted subsidiaries.
The NFRA pointed to several high-profile cases in its enforcement work, including the group audits of Reliance Capital Limited, Reliance Home Finance Limited, and Reliance Commercial Finance Limited, which involved an alleged fraud of Rs 29,000 crore.
Other cases included Coffee Day Global Limited (Rs 3,500 crore alleged fraud), Dewan Housing and Finance Limited (Rs 34,000 crore alleged fraud), and the audit quality review of IL&FS, which collapsed with a debt of Rs 90,000 crore. The authority noted that in these instances, subsidiaries were used for money laundering and siphoning off funds.
Representatives from the Institute of Chartered Accountants of India (ICAI) have expressed concerns over the revised standards.
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