The Institute of Chartered Accountants of India (ICAI) has widened the mandatory applicability of its Audit Quality Maturity Model (AQMM), the Economic Times (ET) reported.
According to the news report, the ICAI has extended the scope of its AQMM to companies that audit subsidiaries as well as associates and joint ventures (JVs) of listed entities, banks or insurance companies that are subject to peer review.
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The change was announced through a public communication by the institute.
In a peer review, an independent auditor usually verifies the “audit processes, procedures and documentations”, followed by the auditor of a company, and issues a report.
Such reviews are intended to strengthen audit quality and enhance the credibility of the auditors involved.
Until now, auditors handling subsidiaries, associates, JVs or holding structures of specified entities were not obliged to apply the AQMM.
The AQMM is designed as a self-assessment matrix that allows companies to assess their stage of audit maturity and pinpoint areas where systems and controls require strengthening.
The ICAI has also suggested that the regulator overseeing partners that hold majority control in a multidisciplinary partnership (MDP) should also be responsible for regulating that company, the ET added, citing sources.
MDPs are structures in which professionals from accounting and consultancy disciplines operate within a single company.
They form an important element of the government’s plan to encourage the rise of large domestic companies that can rival the ‘Big Four’.
Shaktikanta Das, Principal Secretary-2 to the Prime Minister, has held talks with senior finance and corporate affairs ministry officials on ways to enable the growth of large homegrown operators, according to the ET.
Last year, the Corporate Affairs Ministry issued an office memorandum seeking stakeholder feedback on the introduction of MDPs in India.
The ICAI recently deferred the implementation of its Standards on Quality Management for audit and assurance companies.
