The apex body of chartered accountants' ICAI has issued detailed guidelines on audit of internal financial controls over financial reporting as required under the new companies law.

According to the guidance note, the auditor needs to obtain reasonable assurance to state whether an adequate internal financial controls (IFC) system was maintained and whether such internal financial controls system operated effectively in the company in all material respects with respect to financial reporting only.

Under the Companies Act, 2013, auditors are required to separately opine whether the company has adequate internal financial controls system in place and the operating effectiveness of such a framework for the year ending March 31, 2016.

In foreword to the more than 200-page guidance note, the Institute of Chartered Accountants of India (ICAI) has said the requirement under the Act has "cast onerous responsibilities on the statutory auditors".

This is because reporting on internal financial controls is not covered under the standards on auditing issued by the ICAI and also because of the fact that no framework has been prescribed under the Act and the rules thereunder for the evaluation of internal financial controls, it said.

According to Sumit Seth, Partner at Price Waterhouse & Co, the note explains that for auditor reporting, the term IFC is restricted to internal financial control over financial reporting only (ICFR) as of the balance sheet date.

"It (note) also makes clear that such reporting will be applicable for both listed and unlisted companies, including standalone and consolidated financial statements (to the extent of Indian companies within the group)," Seth noted.