Convergence of auditing standards on the cards

Indian auditing standards are on way to convergence based on the standards set by the International Auditing and Assurance Standards Board (IAASB).

"As announced earlier, we have had the convergence in accounting processes, now we are gradually on our way to auditing convergence," said Sunil Talati, president, Institute of Chartered Accountants of India (ICAI).

The IAASB has set 39 auditing standards, of which India follows 35, but not wholly. "We have adapted these according to local legislation and requirements," said Harinder Singh, chairman, Auditing and Assurance Standards Board of ICAI.

"The differences are owed to different auditing practices of Chartered Accountants abroad, size and level of auditing firms and finally the size of the enterprise," Talati added.

The 29 accounting standards and 12 guidelines are in accordance with international standards. The IASSB is now calling for complete convergence which would raise the auditing standards of India and bring it at par with the international standards. The four different standards include assessment of risk, auditing procedure, quality control and documentation process.

An important area of convergence is quality control and internal control. "We already have a quality control standard but are trying to revise it as per the clarity project of IAASB," said Singh.

"Internationally, we have not taken a stand in favour of the 'effectiveness of internal control certificate' but we will look for rotation of partner of a firm after every seven years, in order to accord credibility to the auditing process", Singh added.