ICAI to implement new information systems audit standards: President

The Institute of Chartered Accountants of India (ICAI) will implement comprehensive Information Systems Audit Standards (ISAS) from the end of this month that will help strengthen the audit process in the growing digital ecosystem, ICAI President Prasanna Kumar D said on Wednesday.

The new standards will be voluntary for the first six months. Thereafter the accounting body plans to make these standards mandatory for member chartered accountants (CAs).

The ICAI also plans to collaborate with the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI) and other regulators to expand the use of the new standard which seeks to provide comprehensive assurance in the digital environment.

“We plan to collaborate with all regulators,” Prasanna Kumar, said in his first media interaction after assuming charge as ICAI President last week. Prasanna Kumar has been elected as ICAI President for 2026-27. He has replaced Charanjot Singh Nanda.

He claimed that ICAI is the first accounting body in the world to develop a comprehensive ISAS.

At its core, ISAS adopts the Governance-Risk-Controls-Compliance lens as the foundational audit approach. The standards seek to address IT governance, risk management, internal controls, cyber security and digital data protection controls. For the first time it seeks to introduce auditing standards specifically on cyber security and digital data protection developed by an accounting body.

ISAS establishes a direct linkage between system controls and financial reporting integrity.

“In an environment where financial statements are ERP-generated, system-processed, algorithm-driven, and cloud-hosted, strong Information Systems controls are essential,” ICAI said in a note.

By strengthening assurance over automated entries, revenue systems, core platforms, and technology-based processes, ISAS enhances the reliability of digital financial reporting and reinforces stakeholder confidence across the ecosystem, it said.

A key conceptual advancement under ISAS is the emphasis on understanding the business context of the auditee entity. The standards recognise that IT governance, risk, security and control weaknesses must be evaluated not in isolation, but in terms of their impact on business operations and stakeholders.

On the ongoing probe into the alleged accounting lapses at Gensol Engineering and IndusInd Bank, Prasanna Kumar said the Financial Reporting Review Board (FRRB) of the ICAI is likely to complete its investigation in these matters in the next two months.

He said the FRRB has set up a separate board to fastrack about 10-15 high profile cases of public interest.

“The special committee is looking into all these cases, and the investigation is likely to be completed in the next two months or so,” he added.