Regulatory updates

On 11 July 2023, the Institute of Chartered Accountants of India (ICAI) issued the following Exposure Drafts (EDs):

• SQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
• SQM 2, Engagement Quality Reviews
• SA 220 (Revised), Quality Management for an Audit of Financial Statements
• SA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements
• SA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement
• SA 540 (Revised), Auditing Accounting Estimates and Related Disclosures, and
• SRS 4400 (Revised), Agreed-Upon Procedures Engagements.

Further, ICAI has also prescribed several conforming amendments to other standards, arising out of the aforementioned revised standards.

The EDs are open for comments up to 25 August 2023.

To access the text of the EDs, please click here

Recently, ICAI issued the Exposure Draft (ED) of guidance note on tax audit under Section 44AB of the Income-tax Act, 1961 (relevant for A.Y. 2023-24). The ED incorporates various circulars, council guidelines and related reference material/publications for ease of reference of the practitioners conducting tax audit.

The comment period ended on 6 August 2023.

Further, ICAI has also released a clause-wise quick referencer for tax audit under Section 44AB of the Income Tax Act, 1961.

To access the text of the ED, please click here

To access the text of the quick referencer, please click here

In December 2021, the Organisation for Economic Co-operation and Development (OECD) had published Tax Challenges Arising from the Digitalisation of the Economy– Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS (the Rules). The Rules were introduced with the objective to address tax challenges arising from the digitalisation of the economy by ensuring that large multinational groups pay a minimum amount of tax (i.e., 15 per cent) on income arising in each jurisdiction in which they operate.

Consequently, in May 2023, the International Accounting Standards Board (IASB) issued certain amendments to the International Accounting Standard (IAS) 12, Income Taxes. The amendments issued mainly pertain to:

• Temporary exception to the accounting for deferred taxes arising from the implementation of the Rules, and
• Disclosure requirements.

With an aim to provide similar exceptions to Indian companies, ICAI issued the Exposure Drafts (EDs) of international tax reform-Pillar two model rules – Amendments to AS 22, Accounting for Taxes on Income and Ind AS 12, Income Taxes. The amendments proposed by ICAI are consistent with the amendments issued to IAS 12 by IASB.

The EDs are open for comments up to 25 August 2023.

To access the text of the ED on amendments to AS 22, please click here

To access the text of the ED on amendments to Ind AS 12, please click here

On 25 May 2023, IASB issued certain amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures. The amendments were issued basis the agenda decision issued by the IFRS Interpretations Committee in December 2020 and the subsequent Exposure Draft (ED) on supplier finance arrangement, issued by the IASB. The amendments had introduced certain disclosure requirements under IAS 7 and IFRS 7.

In order to keep the Ind AS converged with IFRS, ICAI issued the ED on supplier finance arrangements – Amendments to Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments: Disclosures. The amendments proposed by ICAI are consistent with the amendments issued by IASB to IAS 7 and IFRS 7.

The ED is open for comments up to 25 August 2023.

To access the text of the ED, please click here