ICAI releases QRB Report on Audit Quality Review for 2022-23

The Institute of Chartered Accountants of India (ICAI) has released QRB Report on Audit Quality Review for 2022-23.

Financial reporting, ultimately, is about trust. Inspections, investigations, and enforcement are critical component of instilling that trust. Another key factor contributing to that trust is the quality of our standards. Probably, next in order is the issue of auditor independence.

Given the growth in the size and complexity of non-audit services, it is important that audit firms maintain a culture of ethics and integrity — placing the highest priority on auditor independence throughout the firm, not just in the audit practice.

Therefore, it is important to have robust and independent organizations setting standards, inspecting firms, and enforcing the rules. It is important to ensure auditor independence and to guard against inherent conflicts that might arise when auditing and other services are mixed. If all that is done to its potential, trust in our financial reporting will only grow and that will truly benefit investors and the public at large.

At the level of Quality Review Board, number of important decisions have been taken with a view to improving the quality of audit in a sustained manner during the financial year 2022-23 till date. Some of the important decisions are highlighted here for your reference.

The present report highlights the key findings observed in the audit quality reviews conducted by the Quality Review Board in respect of audits of private limited companies upto 31.03.2023. It indicates our approach for review, expectations, how we select audit firms for review and how we conduct audit quality review.

The report also highlights overall trends, key findings, analysis of reviewed audit files in terms of technical standards, analysis of observations in audit files under major industries, findings in major focus areas for reviews, summary of observations in other areas, matters of general guidance for Audit Firms etc. Hope the concerned stakeholders will find this Report useful. Now, it is incumbent upon the Audit firms to take remedial actions for the deficiencies identified and improve their audit quality. ICAI may also initiate action to step-up their guidance and training to the membership at large on the areas/ industries/ type of firms highlighted in the Report.

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