Regulatory updates

Statutory audit of banks involves a number of peculiarities due to some unique features of banks and banking operations e.g., huge volumes and complexity of transactions, wide geographical spread of banks’ network, large range of products and services offered, extensive use of technology, strict vigilance by the banking regulator, etc.

In this regard, ICAI releases a publication ‘Guidance Note on audit of banks’ (the guidance note) every year to provide detailed guidance to auditors conducting audit of banks and their branches. The revised 2023 edition of the guidance note is divided into two sections:

Section A – Statutory Central Audit
Section B – Bank Branch Audit

It incorporates the impact of various circulars of the Reserve Bank of India (RBI) as well as certain important advisories, pronouncements of the ICAI which would be relevant for bank audits for the financial year ending 31 March 2023.

The ED is open for comments up to 12 February 2023.

To access the text of the ED, please click here

ICAI, through the Direct Taxes Committee has issued an Exposure Draft (ED) on ‘Guidance Note on audit of charitable institutions under Section 12A of the Income-Tax Act, 1961’ (the guidance note). It is based on the law as amended by the Finance Act, 2022. The Guidance Note explains various important concepts, including:

• Audit and audit report under Section 12A(1)(b)
• Audit under other laws
• Scheme of exemption
• Other relevant judicial precedents, etc.

The comment period on the ED ended on 25 January 2023.

To access the text of the ED, please click here

Over the years, NPOs have grown substantially in terms of their value and operations. Thus, it becomes imperative to ensure their accountability and transparency. Sound financial reporting is a step in this direction. At the international level, it has been recognized that the preparation of financial statements by NPOs is crucial for their accountability and decision-making and for enhancing the trust and confidence of the stakeholders in them. However, presently there are no international standards to guide the NPOs for preparing their financial statements.

In this regard, recently, the first Exposure Draft (ED) of the International Non-Profit Accounting Guidance (INPAG) has been issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) for creating specific financial reporting guidance for the NPOs. The ED is open for comments up to 31 March 2023. Basis the feedback received from various stakeholders, two more EDs would be issued which would collectively comprise the INPAG.

In order to contribute to the standard setting at the international level, the ED has also been hosted on ICAI’s website for public comments with last date as 17 February 2023.

To access the text of the ICAI announcement, please click here