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Unit 2: Auditing Standards and IFRS

2.3 Auditing Standards–Setting in India Notes

As mentioned earlier, the Auditing and Assurance Standards Board of the Institute formulates
the auditing standards. Broadly, following is the procedure for formulating auditing standards:

1. The Auditing and Assurance Standards Board identifies the areas where auditing standards
need to be formulated and the priority in regard to their selection.

2. In the preparation of the auditing standards, the Board is normally, assisted by study
groups comprising of a cross section of members of the Institute.

3. On the basis of the work of the study groups, an Exposure Draft of the proposed auditing
standard is prepared by the Board and issued for comments of the members.

4. After taking into the comments received, the draft of the proposed auditing standard is
finalised by the Board and submitted to the Council of the Institute.
5. The Council considers the final draft of the proposed auditing standard and, if necessary,
modifies the same in consultation with the Board. The auditing standard is then issued
under the authority of the Council.
While formulating the auditing standards, the Board also takes into consideration the applicable
laws, customs, usages and business environment in the country.
2.3.1 International Harmonization of Auditing Standards

The Institute of Chartered Accountants of India is a member of the International Federation of
Accountants. Therefore, as a matter of policy, the auditing standards issued by the ICAI are in
harmony with the International Standards on Auditing. Till date, the IAASB of the IFAC has
issued thirty nine Engagement Standards, comprising one Standard on Quality control (ISQC),
thirty two ISAs, two International Standards on Review Engagements (ISREs), two International
Standards on Assurance Engagements (ISAEs) and two International Standards on Related Services
(ISRSs). The ICAI has issued thirty five auditing standards corresponding to the
Engagement Standards issued by the IAASB of the IFAC and three auditing standards are in the
pipeline.

Notes The Generally Accepted Accounting Principles in the United States (US GAAP),
essentially working to make the two sets of accounting standards increasingly similar to
each other.
Further, the Council of the Institute of Chartered Accountants of India has also approved the
following technical drafts:
 Preface to the Standards on Quality Control, Auditing, Review, Other Assurance and
Related Services
 Due Process of the Auditing and Assurance Standards Board
 Revised Classification and Numbering Pattern of the Auditing and Assurance Standards

 Framework for Assurance Engagements

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