NFRA Critiques Audit Standards: A Closer Look at Charter Firms' Shortcomings

The NFRA released audit quality inspection reports for seven chartered accountancy firms, identifying several shortcomings. Key observations include irregularities in investment audits, shortcomings in independence assessments, and deficiencies in quality and compliance procedures. The inspections covered firm-wide quality controls, scrutinizing practices related to independence, human resources and audit engagements.

The National Financial Reporting Authority (NFRA) has released audit quality inspection reports highlighting shortcomings in several key chartered accountancy firms. The assessments revealed notable irregularities in audit procedures concerning investments and compliance with standards.

Firms such as Price Waterhouse Chartered Accountants LLP and BSR & Co LLP were put under scrutiny for failing to adhere to certain standards including SA 550 and Ind AS 24, regarding related party dealings and disclosures. The inspections also noted issues of auditor independence and inadequate arm's length assessments.

Across the board, NFRA recommended strengthening quality control measures, particularly in revenue recognition and the provision of non-audit services. This increased scrutiny aims to enhance transparency and accuracy in financial reporting practices, ensuring adherence to regulatory standards.