ICAI to provide forensic standards to global accounting bodies

New Delhi: The Institute of Chartered Accountants of India (ICAI) plans to provide its "forensic accounting and investigation standards" to other accounting bodies in the world to help curb financial frauds and scams, ICAI President Charanjot Singh Nanda said.

“We are the world's first accounting body to come out with forensic standards, through which in the cause of frauds we can identify where the money has been diverted or where it has been used in unauthorised ways," Nanda told DH.

He said the ICAI would come out with a framework under which accounting bodies of other countries can use the forensic standards by paying royalty. “We can also offer it as part of bilateral agreements,” he added.

The ICAI released “Forensic Accounting and Investigation Standards” in 2023. It has been made mandatory for all members since July 2023. The standards have been developed by the Digital Accounting and Assurance Board (DAAB) of the ICAI.

The Forensic Accounting and Investigation Standards (FAIS) are a minimum set of requirements that apply to all members of the body when conducting accounting and investigation assignments of any entity. The standards are principle-based, thereby providing adequate scope for professional judgment when applying such principles to unique situations and under specific circumstances.

Nanda said the ICAI would soon enter into an agreement with the Securities and Exchange Board of India (SEBI) to help curb financial frauds and scams in the Indian stock markets.

He claimed that the forensic standards and specialised skills of members would play a crucial role in detecting and curbing financial frauds in the country.

Nanda met SEBI Chairman Tuhin Kanta Pandey last week. According to him, possible collaboration between the ICAI and the stock market regulator was discussed during the meeting. 

Recently, discrepancies and auditing lapses have been reported in accounts of several big companies including IndusInd Bank, Gensol Engineering Ltd and BluSmart Mobility. ICAI has been roped in by the regulators to review financial statements of these firms to identify the possible lapses.

Nanda said the ICAI is likely to conclude the review of financial statements and audit reports of Gensol and BluSmart within the next six months. The financial reporting review board (FRRB) is involved in the process.

With around 4.5 lakh members and 10 lakh students ICAI is the world’s largest accountancy body. 

Nanda said the ICAI has been pushing for the use of new technologies like artificial intelligence, blockchain, and data analytics to meet the evolving needs of the economy.