NFRA’s monitoring and enforcement activities have highlighted the importance of clear communication between statutory auditors and Audit Committees. Series 4 outlines best practices for responding to queries from boards and committees, emphasizing compliance with the Companies Act 2013, SA 260 (R), SA 265, other related auditing standards, and the Standard on Quality Control (SQC).
The publication addresses common challenges in auditing non-financial asset impairment and equips auditors to provide more transparent and effective explanations regarding accounting judgments and estimates.
Key Highlights of Series 4
- Guidance on auditing impairment of non-financial assets as per Ind AS 36.
- Best practices for evaluating accounting estimates and fair value measurements under SA 540.
- Sample questions Audit Committees may pose to auditors to ensure compliance and transparency.
- Recommendations to strengthen governance and quality control in audit practices.
By focusing on these areas, NFRA aims to improve overall audit quality, promote awareness of accounting and auditing standards, and enhance the accountability of statutory auditors to boards and committees.
Enhancing Investor Confidence
NFRA’s initiative reinforces its commitment to protecting investors and the public interest. Clear auditor-committee interaction ensures that boards receive comprehensive information on potential asset impairments, financial estimates, and related disclosures, reducing the risk of misstatements and enhancing the reliability of financial reporting.
The publication also supports ongoing education for auditors and governance professionals, fostering best practices in reporting and judgment assessments across Indian corporations.