The weekly messenger | Edition 45.19

Auditing News

ICAI issues announcement on applicability of “Implementation Guide on Resignation/ Withdrawal from an Engagement to Perform Audit of Financial Statements” to Statutory Auditors of Listed Entities and their Material Subsidiaries – 9 December 2019

The Institute of Chartered Accountants of India (ICAI) had issued its ‘Implementation Guide on Resignation/Withdrawal from an Engagement to Perform Audit of Financial Statements’ in November 2018, which was applicable in case of audits of all listed entities and in case of certain other prescribed class of companies such as banking, insurance companies etc.
 
Consequently, in October 2019, the Securities and Exchange Board of India (SEBI) had also issued a circular regarding ‘Resignation of statutory auditors from listed entities and their material subsidiaries’, which was applicable on listed entities, their material subsidiaries and their statutory auditors.
 
Due to the conflict in the applicability criteria of both the Implementation Guide and the SEBI’s circular, the ICAI has clarified that the Implementation guide would be applicable on the statutory auditors of both the listed entities as well as their material subsidiaries.
 
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ICAI issues Advisory on Exhibit B3 of SEBI’s Circular dated 29th March 2019 regarding Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity – 11 December 2019

The ICAI has issued an advisory with respect to point 7 and 8 of Exhibit B3 ‘Independent Auditor’s Review Report on Review of Consolidated Unaudited Quarterly and Year to date Financial Results for banks’ of the SEBI’s Circular dated 29 March 2019 on ‘Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity’ which require quantification of (a) total assets (b) total revenue (c) Total net profit/(loss) after tax (d) cash flows(net) with respect to branches of banks. 
 
As per the ICAI, since the members were facing certain implementation challenges, while reporting as per the aforesaid Exhibit, as reporting of net profit/(loss) after tax and cash flows of branches is not practically possible. Therefore, it has been advised that while reporting under the said exhibit, the members are not required to report on net profit/(loss) after tax and cash flows of branches, if such details are not contained in the financial statements.
 
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Regulatory News

Joining/Association with “Networks” by Members in Practice – 11 December 2019

The ICAI has issued an announcement, wherein it has clarified that, members in practice cannot join Networks (by whatever name called) other than the Networks registered with the Institute which means that associations with ‘Network’ as a medium of referral of professional work is permissible only, if the Network is registered with the Institute, comprising only of Chartered Accountants/ Chartered Accountant Firms, and governed by the Institute’s Network Guidelines.
 
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Form NFRA – 2 now deployed on NFRA website – 9 December 2019

The National Financial Reporting Authority (NFRA) has deployed the form NFRA -2 on its website w.e.f. 9 December 2019. Accordingly, the same needs to be filed within 90 days from the said date.
 
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