Single authority for auditing, accounting standards soon
October, 06th 2009
The Government is planning to strengthen the National Advisory Committee on Accounting Standards (NACAS), a move that will make the Institute of Chartered Accountants of India (ICAI) report to NACAS. For this, it will hand over the supervisory role of both accounting and auditing standards to NACAS.
NACAS was constituted in 2001 to examine only ICAIs accounting standards for companies in the country, but not for auditing standards. Auditing standards were the sole domain of ICAI.
Towards this purpose, NACAS would be renamed the National Advisory Committee on Accounting and Auditing Standards (NACAAS) to make it the overall authority on accounting and auditing, official sources told Business Line.
NACAAS will also advsce the Government in prescribing the policies on accounting and auditing. These changes have been incorporated in the new Companies Bill.
NACAAS will comprise representatives from regulatory bodies such as ICAI, SEBI, the RBI, ICWAI, ICSI, IA&AS, the Corporate Affairs Ministry, the CBDT, industry chambers and the Comptroller and Auditor-General.
Accounting standards are regarding the contents of the financial statement of a company. Auditing standards include audit evidence, materiality and checks on inventories. Currently, ICAI draws up the accounting standards. These standards are in turn vetted by NACAS, which suggests changes, if needed. The changes in turn are incorporated by ICAI.
The accounting standards are later notified by the Ministry under the advice of NACAS. Soon, the same process will be carried out regarding auditing standards.
The chairperson of NACAAS would be an expert in accountancy, business administration, business law, finance and economics. The Government will also have powers to nominate a professor on accountancy, business management or finance from a recognised university to NACAAS.