ICAI issues Quality Audit Report Review for FY 2020-21

ICAI issues Quality Audit Report Review for FY 2020-21

The Report on Audit Quality Review for Financial Year 2020-21 was released by the Institute of Chartered Accountants of India (ICAI).

“Last year also offered unprecedented challenges, both personal and professional, in every corner of the world,” stated Dr. Parvinder Sohi Behuria, Chairperson of the Quality Review Board. There is unprecedented uncertainty about the economy, future profitability, and a slew of other inputs that make up the foundation of financial reporting. For preparers of financial statements for reporting purposes in the immediate and maybe medium term, there have been significant and multiple financial reporting implications. The ramifications include not only asset and liability measurement, but also transparency and, perhaps, the capacity of an entity to continue as a going concern.”

Despite, and in light of, the significant impacts of COVID-19 – when investors and other stakeholders may have a greater need for high-quality financial information – audit regulators around the world recognised the importance of audit’s contribution in maintaining high-quality financial reporting during this time, and stressed the need for audit firms to fully comply with required standards. During this crisis, many authorities have released important announcements, comments, and instructions for the audit community,” the Chairperson continued.

Many public communications have been issued to alert auditors, companies, and others to the COVID-19 pandemic’s audit, accounting, and disclosure implications, as well as the related steps taken by many regulators, such as the extension of filing deadlines, temporary relief from on-site inspections, and the provision of additional resources.

We have also put in place several safeguards at the Quality Review Board level, such as altering remote working arrangements, the option of temporary reprieve from on-site inspections, and adjusting the time of inspection activity, according to the statement. QRB executed 34 audit quality reviews of 33 organisations in India during the fiscal year 2020-21. In 25 of the 34 completed reviews, QRB gave advisory to concerned Audit companies for further improvement, and two cases were recommended to the ICAI Council for referral to the ICAI Disciplinary Directorate for further action, while seven cases were closed.

“I trust that the interested parties will find this report informative.” Now it is up to the relevant audit companies to correct the problems identified by the QRB, determine the main causes, and improve their audit quality,” the Chairperson said.

The Quality Review Board has stated that audit companies should maintain a continual effort to improve audit quality. Root-cause analysis should be used by audit firms to address non-compliances discovered throughout the assessment. This will aid them in preventing recurrence of the problems. We encourage all audit firms to review the important findings and trends published annually in the QRB’s “Report on Audit Quality Review,” which can be found at https://ift.tt/3k1PRT8.

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