NFRA Seeks Legal Clarity on ICAI’s Authority to Issue Audit Standards

The Solicitor General of India, in an opinion shared with the National Financial Reporting Authority (NFRA), stated that the Institute of Chartered Accountants of India (ICAI) cannot issue binding audit standards.

The opinion also noted that ICAI can take action only against individual Chartered Accountants, not audit firms. The authority to set audit and accounting standards rests solely with the government, specifically the Ministry of Corporate Affairs (MCA). Sources claim that this view emphasises the government’s involvement in regulating the framework by emphasising that neither NFRA nor ICAI have the authority to establish legally obligatory auditing standards.