The government is planning to increase the regulatory oversight over domestic audit firms by asking firms to mandatorily disclose significant amount of information with the audit watchdog National Financial Reporting Authority (NFRA). A newly inserted section 132A in the Corporate Laws (Amendment) Bill, 2026 said that individuals or audit firms cannot be appointed as auditors for specified companies unless they first intimate their ICAI (Institute of Chartered Accountants of India) registration details to NFRA in the prescribed manner.

“The auditors of companies or class of companies or bodies corporate shall file such documents or returns or information with the NFRA, in such form and manner, within such period, and on payment of such fees, as may be specified by regulations by the said Authority,” the draft Bill said.

Despite the fact that the proposed law, which seeks to amend LLP Act 2008, and the Companies Act 2013, has now been referred to the joint parliamentary committee (JPC) for further scrutiny, auditors have raised concerns on the specific proposal.

“My worry is that it will not just be an administrative exercise. They will take information, and see whether a firm is fit to do audit or not,” said senior partner at a Big Four firm, on condition of anonymity.

The National Financial Reporting Authority (NFRA) has flagged several “deficiencies” in the work of major audit firms in India, including two PwC network firms, four KPMG affiliate firms, one EY affiliate firm and a BDO International network firm. The regulator, in its inspection reports released on Monday, said these firms followed certain procedures that went against the auditing norms followed in the country.

In the case of PwC network firms, the NFRA said that during the inspection, it observed the firm detected a breach of independence involving five partners of the PW&A network and one partner of the PwC network. The breach involved acquiring securities in the holding company of a firm for which the audit work was accepted.

“While the firm had already taken remedial actions, yet considering that such matters impinge upon the mandated independence requirement under SQC-1 and Section 141 of the Companies Act, 2013, the audit firm is advised to improve the timely updation and monitoring of the central entity system (CES),” the report said.

The Central Information Commission (CIC) has advised the National Financial Reporting Authority (NFRA) to place orders, directions, circulars and policy decisions affecting audit practices and standards in the public domain.

The observation came while disposing of a second appeal under the RTI Act seeking documents related to NFRA permitting auditors or audit firms to be represented by legal counsel during oral hearings.

The NFRA, set up by the government in 2018 under the Companies Act, 2013, regulates auditors and monitors compliance with accounting and auditing standards by companies. It also oversees the quality of audit services to ensure reliability in financial reporting.

The Insurance Regulatory and Development Authority of India’s (IRDAI) proposal to shift the insurance sector to Indian Accounting Standards (Ind AS) from April 1, 2026, is triggering an intense hunt for actuarial and specialised accounting talent, with insurers increasingly scrambling to secure expertise needed to implement the complex reporting overhaul.

The proposed transition, outlined in a consultation paper by Insurance Regulatory and Development Authority of India, will move insurers away from the current Indian GAAP-based regulatory accounting framework to Ind AS, aligning the sector with global standards similar to IFRS.

The change will significantly alter how insurers measure liabilities, recognise revenue and disclose financial performance.

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The Institute of Chartered Accountants of India (ICAI) will come out with the information systems audit standards later this month.

The Information Systems Audit Standards (ISAS) seek to strengthen the audit process within the country's digital ecosystem.

The institute will be coming out with 11 ISAS.


ICAI President Prasanna Kumar D on Wednesday said it would be the first time that a professional institute would be coming out with such standards, and added that its central council approved the standards earlier this month.

According to the institute, ISAS would establish a direct linkage between system controls and financial reporting integrity.

The top accounting body has been discussing a proposal with the ministry of corporate affairs (MCA) to tweak the PM Internship Scheme (PMIS) so that chartered accountant (CA) firms, especially in tier-II and III cities, can provide internships to professionals. While the discussion is still at an early stage, the Institute of Chartered Accountants of India (ICAI) president Prasanna Kumar D. said that the current eligibility criteria of PMIS needs modifications to make CA firms, including dropping the corporate social responsibility (CSR) requirements for the firms. “CA firms don’t have CSR funds but they are willing to participate in the scheme. Our outreach is more than the corporate sector,” Kumar said.

Expanding the PMIS Reach
At present, top 500 companies in India with the highest CSR spending are allowed to participate in PMIS. A relaxation in rules would open the internship opportunities at over 1,00,000 registered CA firms.

ICAI’s proposal is aligned with the recent announcement in the Union Budget 2026-27 where the finance minister talked about developing a cadre of “corporate mitras” to help micro, small and medium enterprises (MSMEs) to meet their compliance requirements at affordable costs.

In a move to promote domestic audit and advisory firms to grow big in size, the government is planning changes in the relevant rules to modify the definition of “accountant” for the purpose of Safe Harbour rules that will facilitate CA firms to offer different services to global clients with lesser regulatory hurdles. “The tweaks in the definition can hugely benefit Indian audit and advisory firms since safe harbour rules determine who can provide cross-border accounting, costing and related services with predefined margins and tax certainty. Broadening of the definition would allow more Indian firms to qualify for these activities,” an official told FE. In the Budget speech, finance minister Nirmala Sitharaman said that “to support PM Modi’s vision of home-grown accounting and advisory firms to become global leaders, I propose to rationalise the definition of accountant for the purposes of Safe Harbour rules.”

The members at the NFRA (National Financial Reporting Authority) were in conflict recently over the adoption of Ind AS 118, an accounting standard that deals with the “presentation and disclosure in financial statements”. In a meeting held in December, NFRA member R. Narayanaswamy raised his concerns around the use of “EBITDA (earnings before interest, taxes, depreciation, and amortisation)” as a measure to report financial results. In his argument, Narayanaswamy said that the management-defined performance measures (MPMs) like EBITDA should be kept outside the financial statements and notes and disclosed instead in management commentary if needed. “Financial statements should focus solely on accounting measures,” he said in the 22nd NFRA meeting. Instead of EBITDA, Narayanaswamy argued that aspects such as “gross profit” should be presented in the financial statements, which is a global norm, but often missing in the results of Indian firms. EBITDA Dilemma While supporting the inclusion of MPMs (like EBITDA), the Securities and Exchange Board of India (SEBI), which is represented on the NFRA board, said that Ind AS 118 might also articulate principles governing the selection of MPMs to avoid undue subjectivity.

Companies would have to recognise the increase in gratuity liability arising from new labour codes in their interim financial statements and results for the period ending December 31, the Institute of Chartered Accountants of India (ICAI) has said in its FAQs on the new labour codes. The institute said that any change in leave obligation arising from the New Labour Codes should also be stated as an expense in the Statement of Profit and Loss immediately. Earlier, gratuity was payable to an employee only if the person had completed five years of continuous service. Under the new Labour Codes, fixed-term employees, which include contract employees, will be entitled to gratuity on completing one year of service. “Under AS 15/ Ind AS 19, the changes to gratuity benefit resulting from the New Labour Codes are plan amendments and they are required to be treated as past service costs,” ICAI has clarified.

The government expedited the regulatory changes in 2025 with the aim of promoting homegrown audit and advisory firms, and making a few of them of global size. The coming year will see further progress on this front. An inter-ministerial group focussing on developing an ecosystem where the domestic firms can grow in size to compete with the Big Four firms has just been set up. The group is considering sweeping changes in the existing regulations that will allow audit firms to advertise, form cross-border alliances, and enable professionals from different fields such as chartered accountants (CAs), company secretaries, lawyers, and actuaries to work together under a single firm structure. Breaking Silos with MDPs In a September note on setting up of Indian multi-disciplinary partnership (MDP) firms, the ministry of corporate affairs (MCA) noted that the advertising ban for CAs limits them from building strong brands and compete on a global scale, especially against Big Four firms, who can freely advertise and establish market visibility abroad. “There should be a distinction between professional brand-building (logos, sponsorship of professional events) on one hand and solicitation and advertising (advertising on TV and social media) on the other hand,” the note said. It’s expected that the government will speed up the work on this front to fulfill the agenda.

The audit regulations for small and medium enterprises, especially the firms that have very little or no exposure to the public investors, have less complex structures and where the ownership is less dispersed, may ease substantially. The move is aimed at promoting ease of doing business, and facilitating speedy growth of these units without being disrupted by redundant audit interventions. According to official sources, the Institute of Chartered Accountants of India (ICAI) has finalised a new set of auditing standards for these classes of companies, describing them as “less complex entities” under certain defined criteria. These standards will significantly reduce the disclosure requirements and simplify the processes for auditors, they said, but added that the audit quality won’t nevertheless be compromised. The ICAI has already sent the draft standards to the National Financial Reporting Authority (NFRA) for approval. Once cleared by the regulator, the CA body will likely proceed with notifying them, sources close to the development told FE.

The National Financial Reporting Authority (NFRA) chairman Nitin Gupta on Tuesday urged Corporate India to work on a new reporting template for the audit committees as the amount of information shared by them currently is not sufficient for the investors to understand the risks. The Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations have cast a number of critical responsibilities on the audit committees to protect investors, creditors and the public at large. However, there is hardly any information available to the public on whether the audit committees have discharged those functions and duties. “Simply disclosing the number of meetings (held) is not adequate,” Gupta said at an ASSOCHAM event here. The NFRA chairman also suggested that the companies should consider creating a separate board-level risk management committee to identify the emerging risks like artificial intelligence (AI), environmental, social, and governance (ESG), and cybersecurity.

The Comptroller and Auditor General (CAG) is planning to set up a Centre of Excellence for financial audit in Hyderabad and transition towards data-informed and AI-enabled auditing, A M Bajaj, Deputy CAG, said on Wednesday. Envisioned as a national hub for innovation and professional development, the Centre will spearhead research, standardise best-in-class financial audit practices, and nurture advanced skills, reinforcing the CAG’s role as the nation’s supreme audit institution, Bajaj said, stating the outcomes of the 32nd Accountants General Conference here. This institutional investment signals a strong commitment to strengthening fiscal trust, deepening transparency, and setting global benchmarks in financial auditing, he said.

The Comptroller and Auditor General (CAG) on Thursday announced the creation of two centralised cadres to build deeper professional expertise and further improve the quality of audit of central government finances. The CAG has accorded in-principle approval for the creation of specialised cadres — Central Revenue Audit (CRA) Cadre and Central Expenditure Audit (CEA) Cadre — within the Indian Audit and Accounts Department, DAI (HR, IR, CDN) K Subramaniam said at a media briefing here. The scheme will be operationalised from January 1, 2026. At present, the audit of central receipts and expenditure is undertaken by 9 Director General (Audit)/Principal Director (Audit) offices and exclusive offices with cadre control dispersed across multiple state civil audit offices and independent CCAs. Subramaniam said the centralisation will unify cadre management, consolidating multiple fragmented cadres into two specialised streams.

The Institute of Chartered Accountants of India (ICAI) is planning to submit its recommendations to the government on the revision of an auditing standard that had led to its rift with the National Financial Reporting Authority (NFRA) last year, potentially reigniting the tussle, said people familiar with the matter. The ICAI, the people said, feels its concerns were overlooked by the NFRA, the audit regulator for mainly listed companies, when the latter prescribed the revised Standard of Auditing (SA) 600, in sync with global rules, to the corporate affairs ministry late last year. The apex accountants' body opposed the NFRA's recommendations on the revised SA600, arguing any such move would mainly benefit large audit firms at the cost of small and mid-sized ones that are the backbone of the Indian audit ecosystem. But the NFRA believed the revised standard would further bolster audit quality in India.

The Institute of Chartered Accountants of India (ICAI) has proposed to significantly relax the regulatory regime for practicing chartered accountants (CAs), by allowing them to form partnerships with some other professionals, sponsor events and conduct web-casts, among other things. In all, the ICAI has proposed 41 significant changes to the all-important Code of Ethics (CoE) that govern CAs in the country, in a recently released exposure draft. In addition, the self-regulatory body has proposed changes in Council Guidelines for Advertisement, 2008 to make them more contemporary. ”. Under the CA Act 1949, CAs and their firms are allowed to advertise through “write-ups” wherein the write-up should not include the names of the clients (both past and present), and its font size should not exceed 14 points. The exposure draft has proposed to remove the limit on font size and the requirement to mention membership number/firm registration number (FRN).

Pushing ahead with efforts to create homegrown big audit firms, ICAI plans to amend its Code of Ethics to provide more leeway for chartered accountants in terms of issuing advertisements and maintaining their own websites, among other activities. The Institute of Chartered Accountants of India (ICAI) will release the exposure draft on the many changes proposed to the Code of Ethics, its President Charanjot Singh Nanda said at a briefing here on Friday. The government has been pushing for building indigenous professional service giants, and free trade agreements with various countries also present expansion opportunities for Indian entities.

As the government is moving fast to enable formation of multi-disciplinary partnership firms of professionals in India with necessary regulatory frameworks, the Institute of Chartered Accountants of India (ICAI) is planning to make recommendations on ways to arrange finances for proliferation and growth of such entities in India. The ICAI, which is a body supported by a law made by Parliament, will prepare a report focusing on bringing finances to such firms. ICAI President Charanjot Singh Nanda said here on Sunday that discussions were on within the government level also on boosting the financial avenues for MDPs, so that they can grow in size and diversity with some even big enough to rival the global Big Four.

In its bid to catalyse the growth of Indian audit and advisory forms and making a few of them big enough even to rival the Big Four, the government is considering a slew of regulatory relaxations. These include easing curbs on advertising by professional service providers like chartered accountants (CAs), lawyers and company secretaries, and allowing them to engage in brand-building. A proposal to restrict the participation of foreign advisory firms in government contracts is also under active consideration. Inter-ministerial push for professional capacity building According to sources, these and other measures aimed at accelerating the growth and reach of Indian audit and advisory firms were taken up at an inter-ministerial meeting held on Tuesday at the Prime Minister’s Office (PMO). Another focus area is to aid capacity-building by professional institutes like the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI) and the Institute of Cost and Works Accountants of India (ICWAI). Amendments in the Public Procurement (Preference to Make in India), Order 2017, and changes in the Companies Act, 2013, to allow the creation of multi-disciplinary partnership (MDP) firms are found to be necessary, the sources said.