Setback to ICAI as SG holds Govt Sole Authority on Audit Standards in Legal Opinion

The Solicitor General (SG) of India issued a legal opinion stating that the government is the sole authority on setting audit standards, dealing a setback to the Institute of Chartered Accountants of India (ICAI). The opinion clarifies that the ICAI does not have the authority to prescribe auditing standards, which falls under the purview of the government. This decision is based on the Companies Act, 2013, which empowers the government to set auditing standards in consultation with the National Financial Reporting Authority (NFRA). The SG’s opinion emphasizes the need for a unified approach to auditing standards to ensure consistency and reliability in financial reporting. This development is expected to have significant implications for the auditing profession in India, as it reinforces the government’s role in regulating audit practices and maintaining the integrity of financial statements.