Regulatory updates

On 1 June 2023, the Institute of Chartered Accountants of India (ICAI), through the Digital Accounting Assurance Board issued the Exposure Drafts (EDs) of the Guidance Notes on Forensic Accounting and Investigation Standards(FAIS). These include:

• Guidance Note - FAIS 000: Over Arching Documents
• Guidance Note - FAIS 110: Nature of Engagement
• Guidance Note - FAIS 120: Fraud Ris
• Guidance Note - FAIS 130: Laws and Regulations
• Guidance Note - FAIS 140: Applying Hypotheses
• Guidance Note - FAIS 210: Engagement Objectives
• Guidance Note - FAIS 220: Engagement Acceptance and Appointment
• Guidance Note - FAIS 230: Using the Work of An Expert
• Guidance Note - FAIS 240: Engaging with Agencies
• Guidance Note - FAIS 250: Communication with Stakeholders
• Guidance Note - FAIS 310: Planning the Assignment
• Guidance Note - FAIS 320: Evidence and Documentation
• Guidance Note - FAIS 330: Conducting Work Procedures
• Guidance Note - FAIS 340: Conducting Interviews
• Guidance Note - FAIS 350: Review and Supervision
• Guidance Note - FAIS 360: Testifying Before a Competent Authority
• Guidance Note - FAIS 410: Applying Data Analysis
• Guidance Note - FAIS 420: Evidence Discovery in Digital Domain
• Guidance Note - FAIS 430: Loans Or Borrowings
• Guidance Note - FAIS 510: Reporting Results
• Guidance Note - FAIS 610: Quality Control

The comment period ended on 21 June 2023.

To access the text of the ICAI announcement, please click here

On 11 July 2023, the Institute of Chartered Accountants of India (ICAI) issued the following Exposure Drafts (EDs):

• SQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
• SQM 2, Engagement Quality Reviews
• SA 220 (Revised), Quality Management for an Audit of Financial Statements
• SA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements
• SA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement
• SA 540 (Revised), Auditing Accounting Estimates and Related Disclosures, and
• SRS 4400 (Revised), Agreed-Upon Procedures Engagements.

Further, ICAI has also prescribed several conforming amendments to other standards, arising out of the aforementioned revised standards.

The EDs are open for comments up to 25 August 2023.

To access the text of the EDs, please click here

Recently, ICAI issued the Exposure Draft (ED) of guidance note on tax audit under Section 44AB of the Income-tax Act, 1961 (relevant for A.Y. 2023-24). The ED incorporates various circulars, council guidelines and related reference material/publications for ease of reference of the practitioners conducting tax audit.

The comment period ended on 6 August 2023.

Further, ICAI has also released a clause-wise quick referencer for tax audit under Section 44AB of the Income Tax Act, 1961.

To access the text of the ED, please click here

To access the text of the quick referencer, please click here

In December 2021, the Organisation for Economic Co-operation and Development (OECD) had published Tax Challenges Arising from the Digitalisation of the Economy– Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS (the Rules). The Rules were introduced with the objective to address tax challenges arising from the digitalisation of the economy by ensuring that large multinational groups pay a minimum amount of tax (i.e., 15 per cent) on income arising in each jurisdiction in which they operate.

Consequently, in May 2023, the International Accounting Standards Board (IASB) issued certain amendments to the International Accounting Standard (IAS) 12, Income Taxes. The amendments issued mainly pertain to:

• Temporary exception to the accounting for deferred taxes arising from the implementation of the Rules, and
• Disclosure requirements.

With an aim to provide similar exceptions to Indian companies, ICAI issued the Exposure Drafts (EDs) of international tax reform-Pillar two model rules – Amendments to AS 22, Accounting for Taxes on Income and Ind AS 12, Income Taxes. The amendments proposed by ICAI are consistent with the amendments issued to IAS 12 by IASB.

The EDs are open for comments up to 25 August 2023.

To access the text of the ED on amendments to AS 22, please click here

To access the text of the ED on amendments to Ind AS 12, please click here

On 25 May 2023, IASB issued certain amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures. The amendments were issued basis the agenda decision issued by the IFRS Interpretations Committee in December 2020 and the subsequent Exposure Draft (ED) on supplier finance arrangement, issued by the IASB. The amendments had introduced certain disclosure requirements under IAS 7 and IFRS 7.

In order to keep the Ind AS converged with IFRS, ICAI issued the ED on supplier finance arrangements – Amendments to Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments: Disclosures. The amendments proposed by ICAI are consistent with the amendments issued by IASB to IAS 7 and IFRS 7.

The ED is open for comments up to 25 August 2023.

To access the text of the ED, please click here