Audit/AAPE Amendments | CA Final | May 2023

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Audit Amendments CA Final

Amendments for Audit Exam CA Final May 2023

Paper-3: Advanced Auditing and Professional Ethics

The significant notifications/circulars issued up to 31st October, 2022 are relevant for May 2023 exams. Further, amendments which were applicable for November 2022 examinations are also relevant for May 2023 examinations.

Check out Taxmann's Advanced Auditing & Professional Ethics (Audit) | TEXTBOOK, which presents the subject matter in simple & concise language with the presentation in a tabular format. It also covers all past exam questions of ICAI until Nov. 2022, RTPs & MTPs of ICAI and chapter-wise marks distribution. 750+ questions & case studies with hints are also covered along with every topic for easy understanding.

CA-Final | New Syllabus | May/Nov. 2023 Exams

Key Highlights of Amendments

Sr. No. Chapter Type of Amendment Level of Amendment
1. Chapter 5 Amendment in the definition of “small company” Minor
2. Chapter 11 Revised Regulatory Framework for NBFCs Major
3. Chapter 16 Unit 3 Forensic Accounting Minor
4. Chapter 17 Unit 1 Introduction Minor
5. Scope of Peer Review Minor
6. Amendment in definition of Technical, Professional and Ethical Standards Minor
7. Amendment in definition of Assurance Engagement Minor
8. Practice Units subject to Review Major
9. Requirement of Minimum Members of Peer Review Board Minor
10. Meeting Requirements Minor
11. Eligibility to be a Reviewer Minor
12. Declaration of Confidentiality Minor
13. Procedure for initiating Peer Review Major
14. Execution Minor
15. Procedure for Peer Review of a New Unit Minor
16. Reporting by the Peer Reviewer Major
17. Review of report by the Peer Review Secretariat Major
18. Issuance of Peer Review Certificate Major
19. Validity of Peer Review Certificate Minor
20. Chapter 18 Fees – Relative Size Major
21. Tax Services to Audit Clients Minor
22. Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in service Minor
23. Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in public practice Minor

Amendment Details

Sr. No. Heading Amended Provisions

Chapter 5: Company Audit
1. Amendment in the definition of “small company” Earlier Provision: As per the Companies (Specification of Definitions Details) Rules, 2014, the paid-up capital and turnover of the small company shall not exceed rupees two crore and rupees twenty crore respectively.

As per Companies (Specification of definition details) Amendment Rules, 2022 dated 15th September, 2022 the following amendments were made in the Companies (Specification of definition details) Rules, 2014.

Amended Provision: Clause (t) of Rule 2, sub-rule (1) of Companies (Specification of Definitions Details) Rules, 2014 has been substituted as:

“(t) For the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees four crore and rupees forty crore respectively”.

Hence, “small company’’ means a company, other than a public company whose-

(i) paid-up share capital does not exceed four crore rupees, and

(ii) turnover as per profit and loss account for the immediately preceding financial year does not exceed forty crore rupees.

Chapter 11: Audit of Non-Banking Financial Companies
2. Revised Regulatory Framework for NBFCs Pursuant to the announcement of Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs on 22nd October, 2021 to be effective from 01st October, 2022, RBI has revised different facets of existing NBFC Classification and regulation like Capital Requirements, Governance Standards, Prudential Regulations, etc. based on four layers that are defined based on their size, activity, and perceived riskiness.

These four layers are NBFC – Base Layer (NBFC-BL), then NBFC- Middle Layer (NBFC-ML), NBFC Upper Layer (NBFC-UL) and lastly NBFC – Top Layer (NBFC-TL). The Top layer is ideally expected to be empty and will be filled by RBI based on required need.

Details of NBFCs populating the various layers is mentioned below:

Base Layer – The Base Layer shall comprise of

a) non-deposit taking NBFCs below the asset size of ₹1000 crore and

b) NBFCs undertaking the following activities-

(i) NBFC-Peer to Peer Lending Platform (NBFC-P2P),

(ii) NBFC-Account Aggregator (NBFC-AA),

(iii) Non-Operative Financial Holding Company (NOFHC) and

(iv) NBFCs not availing public funds and not having any customer interface.

Middle Layer – The Middle Layer shall consist of

a) all deposit taking NBFCs (NBFC-Ds), irrespective of asset size,

b) non-deposit taking NBFCs with asset size of ₹1000 crore and above and

c) NBFCs undertaking the following activities

(i) Standalone Primary Dealers (SPDs),

(ii) Infrastructure Debt Fund – Non-Banking Financial Companies (IDF-NBFCs),

(iii) Core Investment Companies (CICs),

(iv) Housing Finance Companies (HFCs) and

(v) Infrastructure Finance Companies (NBFC-IFCs).

Upper Layer – The Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology as provided in the Appendix to this circular. The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor.

Top Layer – The Top Layer will ideally remain empty. This layer can get populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the Upper Layer. Such NBFCs shall move to the Top Layer from the Upper Layer.

Categorisation of NBFCs carrying out specific activity

As the regulatory structure envisages scale based as well as activity -based regulation, the following prescriptions shall apply in respect of the NBFCs

a) NBFC-P2P, NBFC-AA, NOFHC and NBFCs without public funds and customer interface will always remain in the Base Layer of the regulatory structure.

b) NBFC-D, CIC, IFC and HFC will be included in Middle Layer or the Upper Layer (and not in the Base layer), as the case may be. SPD and IDF-NBFC will always remain in the Middle Layer.

c) The remaining NBFCs, viz., Investment and Credit Companies (NBFC-ICC), Micro Finance Institution (NBFC-MFI), NBFC-Factors and Mortgage Guarantee Companies (NBFC-MGC) could lie in any of the layers of the regulatory structure depending on the parameters of the scale based regulatory framework.

d) Government owned NBFCs shall be placed in the Base Layer or Middle Layer, as the case may be. They will not be placed in the Upper Layer till further notice.

References to NBFC-ND, NBFC-ND-SI & NBFC-D – From October 01, 2022:

All references to NBFC-ND shall mean NBFC-BL and all references to NBFC-D and NBFC-NDSI shall mean NBFC-ML or NBFC-UL, as the case may be.

Chapter – 16: Unit 3: Forensic Accounting (Earlier Forensic Audit)
3. Forensic Audit replaced with Forensic Accounting The word “Forensic Audit” in this Chapter including the name of Unit 3 stands changed to “Forensic Accounting”. All the references to “Forensic Audit” throughout the study material shall stand changed to “Forensic Accounting”. Similarly, ‘Forensic Auditor’ should also be read as ‘Forensic Accountant’.

Chapter – 17: Peer Review & Quality Review – Unit I Peer Review
The word “Statement” or “Statement on Peer Review” used throughout the chapter shall be substituted as “Guidelines” or “Peer Review Guidelines, 2022” respectively.
4. Amendments in Introduction a. Earlier Provision: “Technical, Professional and Ethical Standards as applicable including other regulatory requirements thereto and…”

substituted with the words

Amended Provision: “Technical, Professional and Ethical Standards as applicable including Audit Quality Maturity Model wherever applicable or any other regulatory requirements as may be prescribed by the Council or any Committee and…”

b. At the end of the explanation of term Peer Review the following reference to guidelines shall be added “[sub-clause 14 of clause 2 of Peer Review Guidelines, 2022]”.

c. For term Reviewer the following definition shall be substituted

“Reviewer” – means a member duly approved and empanelled by the Board on fulfilling the qualifications prescribed for a Reviewer as per Guideline 26 of these Guidelines [sub-clause 19 of clause 2 of Peer Review Guidelines, 2022]”.

d. Insertion of Branch Peer Reviewer definition:

“Branch Peer Reviewer” – means a Reviewer appointed to conduct the Peer Review of the Branch of a Practice Unit. The qualifications and other obligations and duties of the Branch Peer Reviewer shall be the same as that of the Reviewer [sub-clause 5 of clause 2 of Peer Review Guidelines, 2022]”.

e. After the definition of Practice Unit, the following definition of New Unit shall be inserted

“New Unit – means a firm whose date of establishment is less than 12 months immediately preceding the date of receipt of application of Peer Review and which may or may not have rendered any assurance service during the said period or a Practice Unit in existence for a period exceeding 12 months but not rendering any assurance services. [sub-clause 12 of clause 2 of Peer Review Guidelines, 2022]”.

f. Revised definition of the term Peer Review Board is

“Peer Review Board – means the Board constituted by the Council in terms of these Guidelines from time to time. [The expression “Peer Review Board” is hereinafter referred to as “Board] [sub-clause 13 of clause 2 of Peer Review Guidelines, 2022]”.

“The Peer Review Guidelines, 2022 issued by Council are covered under clause (1) of Part II of Second Schedule to the Act and it is obligatory for the Practice Unit to comply with the provisions contained in these Guidelines.”
5. Scope of Peer Review Insertion of new clause after clause (iii) and accordingly all the clauses shall stand re-numbered

“(iv) Self-evaluation under Audit Quality Maturity Model or any other guideline issued by the Centre for Audit Quality”.
6. Amendment in definition of Technical, Professional and Ethical Standards under Scope of Peer Review Insertion of new clause after clause (vi)

“(vii) Any other Technical, Professional, Ethical Standards and other Standards issued by any authority governing the profession of Chartered Accountancy. [sub-clause 23 of clause 2 of Peer Review Guidelines, 2022]”.
7. Amendment in definition of Assurance Engagement under Scope of Peer Review Insertion of new clause after clause (viii)

“(ix) Any other service rendered, or function performed by practitioner not prescribed by the Council to be ‘Assurance Engagement [sub-clause 2 of clause 2 of Peer Review Guidelines, 2022]”.
8. Practice Units subject to Review Earlier Provision: “Practice Units subject to Review were classified under Level -I and Level-II category.

Under Peer Review Guidelines this has been replaced with Peer Review Mandate implementation.

Amended Provision: As per Clause 5 of Peer Review Guidelines, 2022, criteria of Peer Review are defined on following basis:

i. Mandatory – Peer Review can be mandated for such Practice Units as may be decided by the Council. Or,

ii. Voluntary – Any Practice Unit may, suo motu, apply to the Board for the conduct of its Peer Review. Or,

iii. Special Case – The Board, based on specific information received from Secretary, ICAI or Disciplinary directorate or any other Regulator, which in the opinion of the Board requires a special Peer Review of the Practice Unit, may conduct a special Peer Review of the Practice Unit for such a period determined by the Board.

For Mandatory category the Council at its 407th Meeting of the Council held from 7th – 9th January, 2022 decided to mandate the Peer Review process for coverage of more firms under Peer Review process i.e., the Peer Review Mandate.

Also, it was clarified that holding a valid Peer Review certificate by Practice Units should be a prerequisite for undertaking audit of all entities falling under phase I; II; III and IV of the mandate from respective dates of mandate becoming operative.

Accordingly, the Peer Review Mandate (Revised), operative from April 1, 2022, has been made in following four stages:

Phase Category of firms covered for Mandatory Peer Review Date from which Peer Review is Mandatory
I(*) Practice Units which propose to undertake Statutory Audit of enterprises whose equity or debt securities are listed in India or abroad as defined under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: For these Practice Units, there is a pre-requisite of having Peer Review Certificate. 1st April, 2022
II Practice Units which propose to undertake Statutory Audit of unlisted public companies having

  • paid-up capital of not less than rupees five hundred crores or
  • having annual turnover of not less than rupees one thousand crores or
  • having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial year: For these Practice Units, there is a pre-requisite of having Peer Review Certificate.

OR

Practice Units rendering attestation services and having 5 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit.

 1st April, 2023
III Practice Units which propose to undertake the Statutory Audit of entities which have raised funds from public or banks or financial institutions of over Fifty Crores rupees during the period under review or of anybody corporate including trusts which are covered under public interest entities: For these Practice Units, there is a pre-requisite of having Peer Review Certificate.

OR

Practice Units rendering attestation services and having 4 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit.

 1st April, 2024
IV Practice Units which propose to undertake audits of branches of Public Sector banks: For these Practice Units, there is a pre-requisite of having Peer Review Certificate.

OR

Practice Units rendering attestation services and having 3 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit.

 1st April, 2025

(*) for auditors from this category, Peer Review is already mandatory by SEBI; this mandate is a further requirement stipulated by the ICAI.

Thus, at each phase, before undertaking statutory audit, the concerned Practice Unit should possess Peer Review Certificate.
9. Requirement of Minimum Members of Peer Review Board “The Board shall consist of a minimum of six and a maximum of twelve members to be appointed by the Council, of whom not less than fifty per cent shall be from amongst the members of the Council.”
10. Meeting Requirements of Peer Review Board “Provisions related to the time, place and quorum of Meetings of the Peer Review Board as well as procedure for transaction of business shall be governed by the Chartered Accountants Regulation, 1988.”
11. Eligibility to be a Reviewer Earlier Provision: ‘7 years audit experience’

Amended Provision: ‘7 years of assurance practice experience’.
12. Declaration of Confidentiality In para on Confidentiality para (b) ‘unless’ word to be read as ‘except’ and last para to be read as “A Declaration of Confidentiality (Form 4) shall be signed by all members of the Board and the Board’s Secretariat.”
13. Procedure for initiating Peer Review Whole Para on Selection of Practice Unit & Appointment of Reviewer and Planning shall stand substituted with the below Paragraph:

“Procedure for initiating Peer Review:

(1) Practice Units which desire to get Peer Reviewed shall make an application for Peer Review in the Application cum Questionnaire in Form 1.

(2) In case the Peer Review is initiated by the Board, the Application cum Questionnaire in Form 1 should be submitted by the Practice Unit on the request of the Peer Review Board Secretary.

(3) The Application mentioned under clauses 6 (1) and 6 (2) above received by the Board shall be duly numbered.

(4) On receipt of the said Application cum Questionnaire, names of three Reviewers shall be recommended by the Board to the Practice Unit within three working days.

(5) The Practice Unit shall select one out of the three recommended Reviewers and intimate to the Board within one working day of receipt of the names.

(6) The Board shall appoint the Peer Reviewer selected by the Practice Unit in accordance with these Guidelines.

(7) The Board shall intimate the Reviewer so selected to submit a Declaration of Confidentiality in Form 2 to the Practice Unit within two working days from the receipt of choice of name of the Reviewer from the Practice Unit.

(8) The Practice Unit shall also provide a copy of the Application cum Questionnaire in Form 1 submitted to the Board as per clause 6 (1) or 6 (2) above to the Reviewer within two working days of the appointment of the Reviewer.

Peer Review Procedure to be followed by the Peer Reviewer:

(1) Before commencement of Peer Review, the Peer Reviewer shall ensure that the Declaration of confidentiality is furnished to the Practice Unit and acknowledgement of receipt thereof is obtained by him.

(2) On receiving the Application cum Questionnaire in Form 1 from the Practice Unit, the Peer Reviewer shall initiate the Peer Review by intimating the Practice Unit of proposed visit and the proposed samples selected to be kept ready by the Practice Unit. The proposed samples selected are to be intimated by the Peer Reviewer in Form 5 prescribed by the Board.

(3) The Reviewer may seek further/ additional clarification in Form 6 from the Practice Unit on the information furnished/ not furnished by the Practice Unit in the Questionnaire. The Practice Unit shall provide this additional information to the Reviewer within one working day.

(4) The Reviewer shall, within two working days of receiving the information from the Practice Unit, select assurance service engagements that he would like to review and intimate the same to the Practice Unit and the Peer Review Board in Form 5.

(5) The Reviewer shall plan for an “on–site review” visit for initial meeting in consultation with the Practice Unit. The Reviewer shall give the Practice Unit at least two working days to keep ready necessary records of the selected assurance services in Form 5.

(6) The Reviewer and Practice Unit shall mutually co-operate and ensure that the entire review process is completed within twenty working days from the date of receipt of application from the Practice Unit for being Peer Reviewed or from the date of notifying the Practice Unit about its selection for Review as the case may be.

(7) In case of Peer Review of a New Unit, the Reviewer and Practice Unit shall mutually co-operate and ensure that the entire review process is completed within seven working days from the date of receipt of application cum questionnaire from the Practice Unit for being Peer Reviewed”.
14. Execution The words “seven working days” should be substituted with “six working days”.
15. Procedure for Peer Review of a New Unit The following paragraphs shall be added:

“Procedure for Peer Review of a New Unit:

  1. Peer Review of a New Unit is to be conducted based on the antecedents of partners and policy parameters announced by the Practice Unit for conduct of attest function. The Reviewer has to verify the same from the Application cum Questionnaire submitted by the Practice Unit in Form 1 as well as an onsite visit to the Practice Unit which shall be restricted to one day.
  2. The Reviewer shall thereafter submit a Report to the Board in the formats as prescribed by it.”
16. Reporting by the Peer Reviewer Earlier Provision: “Reporting”

substituted with the words

Amended Provision: “Reporting by the Peer Reviewer”

After completing the on-site review, the Reviewer, shall submit the Peer Review Report to the Board along with Form 9 if in his opinion, the Practice Unit has adequate systems and procedures in compliance with the Technical, Professional and Ethical Standards. A copy of the report shall also be forwarded to the Practice Unit.

(1) In case, in the opinion of the Peer Reviewer, the systems and procedures of the Practice Unit are deficient or non-compliant with reference to any matter that has been noticed by him or if there are other matters where he wants to seek clarification, he shall communicate his findings to the Practice Unit, in a Preliminary Report issued by him.

(2) The Practice Unit shall, within two working days of the date of receipt of the findings, make its submissions or representations, in writing to the Reviewer.

(3) If the Reviewer is satisfied with the reply received from the Practice Unit, he shall submit an unqualified Peer Review Report to the Board along with Form 9. A copy of the report shall also be forwarded to the Practice Unit.

(4) In case the Reviewer is of the opinion that the response submitted by the Practice Unit under clause 9 (4) above is not satisfactory, the Reviewer shall submit a Qualified Report to the Board incorporating his reasons for the same along with Form 9. A copy of the report shall also be forwarded to the Practice Unit.

(5) The Peer Review Report should state that the system of quality control for the assurance services of the Practice Unit for the period under Review has been designed so as to carry out the assurance services in a manner that ensures compliance with Technical, Professional and Ethical Standards.

(6) The Peer Reviewer shall ensure to submit the following documents along with the Peer Review Report:

(i) Annexures to the Report as prescribed by the Board

(ii) Copy of Questionnaire as received from the Practice Unit

(iii) List of samples selected by him in accordance with the criteria prescribed by the Board

(iv) Preliminary Report, if issued, along with Practice Unit’s submissions on the same.

(7) The Practice Unit as well as the Reviewer shall ensure that all documents submitted to the Board are duly dated, signed and complete in all aspects.

(8) The Reviewer and Practice Unit shall mutually co-operate and ensure that the entire review process is completed within twenty working days from the date of receipt of application from the Practice Unit for being Peer Reviewed or from the date of notifying the Practice Unit about its selection for Review as the case may be.

(9) In case of Peer Review of a New Unit, the Reviewer and Practice Unit shall mutually co-operate and ensure that the entire review process is completed within seven working days from the date of receipt of application cum questionnaire from the Practice Unit for being Peer Reviewed.”
17. Review of report by the Peer Review Secretariat Review of report by the Peer Review Secretariat under the supervision and directions of Peer Review Board Secretary

(1) The Peer Review Board Secretary shall ensure that the Peer Review report is accompanied by all the documents as mentioned under Clause 9 (7) of the Guidelines. It shall also ensure that the documents are complete in all aspects.

(2) All reports shall be placed before the Board or its Sub-Committee for its consideration and issuance of Peer Review Certificate.

(3) In case of a qualified report, the Peer Review Board Secretary shall place the report before the Board for consideration. The Board may decide for a “Follow On” Review after a period of one year from the date of issue of report by the Peer Reviewer. If the Board so decides, the period of one year may be reduced but shall not be less than six months from the date of issue of the report.
18. Issuance of Peer Review Certificate (1) In case of an unqualified report issued by the Peer Reviewer, the Peer Review Board Secretary shall place the report before the Board or its Sub-Committee for consideration and issuance of Peer Review Certificate to the Practice Unit, but only after the Peer Reviewer confirms the fee receipt from the Practice Unit by him.

(2) A Peer Review Certificate shall be issued to New Units subject to the Procedures followed by the reviewer as prescribed under Clause 8 of these Guidelines and other clauses of these Guidelines, as the case may be.

(3) The Certificates so issued by the Board or the Sub-Committee shall be noted by the Board at its meeting.

(4) The Certificate shall be duly signed by the Chairman, Vice Chairman and Secretary of the Board mentioning the validity period.

(5) The Peer Review Board Secretary shall serve the Peer Review Certificate upon the Practice Unit.

(6) The Peer Review Board Secretary shall update the List of Practice Units having a valid Peer Review certificate incorporating the names of Practice Units to whom the Peer Review certificates have been issued on the ICAI website.

(7) In cases where a Qualified Report has been issued by the Reviewer and has been considered by the Board, the Peer Review Board Secretary shall inform the Practice Unit that a Peer Review certificate cannot be issued along with the reasons therefor as well as inform about the due date for conducting a follow-on review as may be decided by the Board.
19. Validity of Peer Review Certificate The following shall be added at the end of the paragraph:

“The Peer Review Certificate issued to a Practice Unit shall be valid for a period of three years or such other period as may be decided by the Board commencing from the date of receipt of Peer Review report by the Board. The validity of the Peer Review Certificate issued to New Units shall be decided by the Board.

The Council may for such reasons as may be prescribed by it extend the validity of existing Peer Review certificate granted to a Practice Unit. The Practice Unit shall make an Application in Form 8 requesting for extension of validity”.

Chapter 18: Professional Ethics
The Council at its 413th meeting held in August, 2022 decided the above-mentioned deferred provisions contained in Volume-I of Code of Ethics, 2019 which have been deferred from 1st July, 2020 till 30th September, 2022 will be made applicable from 1st October, 2022 with certain amendments.

The significant amendments are as under: –
20. Fees – Relative Size
S. No. Existing Provision Revised Provision
1. Disclosure is required where for two consecutive years, the gross annual professional fees from audit client represents more than 15% of the total fees of the firm. Differentiated disclosure requirements: –

For Non-Public Interest Entities (PIE)-

Disclosure is required where for two consecutive years, the gross annual professional fees from an audit client represents more than 40% of the total fees of the firm.

For Public Interest Entities-

Disclosure is required where for two consecutive years, the gross annual professional fees from an audit client represents more than 20% of the total fees of the firm.
2. Exemption from applicability of the provision where total Fees received by Firm does not exceed 5 lacs of rupees. Exemption from applicability of the provision where total Fees received by Firm does not exceed 20 lacs of rupees.
3. Exemption from the applicability of the provision in the case of audit of government Companies, public undertakings, nationalised banks, public financial institutions or where appointments of auditors are made by the Government. In addition to these categories, ‘Regulators’ has been added.
4. Disclosure to Those Charge with Governance of audit client Disclosure to the Institute
5. Pre-Issuance review or Post issuance Review: Action to be taken to address the threat created due to fees dependency as aforesaid. Repealed
21. Tax Services to Audit Clients (Sub-section 604)
S.No. Existing Provision Revised Provision
1. In case of Assistance in the resolution of Tax disputes, the term “Court” is explained as under: –

“What constitutes a “Court” depends on how tax proceedings are heard in India”

 In case of Assistance in the resolution of Tax disputes, the term “Court” is explained as under: –

“For the purpose of this subsection, “Court” does not include a Tribunal”.
22. Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in service (Section 260)
S.No. Existing Provision Revised Provision
1. Applicable to all employees of listed entities Applicable to Senior Professional Accountants in service, being employees of listed entities.
2. Senior professional accountants in service (“senior professional accountants”) are directors, officers or senior employees able to exert significant influence over, and make decisions regarding, the acquisition, deployment and control of the employing organization’s human, financial, technological, physical and intangible resources. No Change.

It is further explained that the senior professional accountants refer to key managerial personnel.
23. Responding to Non-Compliance with Laws and Regulations (NOCLAR) applicable to Professional Accountants in public practice (Section 360)
S.No. Existing Provision Revised Provision
1. Applicable to Audit engagement of all listed entities Applicable to Audit engagements of entities the shares of which are listed on recognized stock exchange(s) in India and have net worth of 250 crores of rupees or more.

The applicability of Section 360 will subsequently be extended to all listed entities, at the date to be notified later.
2. The term “Audit Engagement” defined in Glossary as applicable to entire Code: –

“A reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects), in accordance with an applicable financial reporting framework, such as an engagement conducted in accordance with Standards on Auditing. This includes a Statutory Audit, which is an audit required by legislation or other regulation”

 No change in definition with respect to rest of the Volume-I of Code of Ethics.

“For the purpose of Section-360 “Audit” or “Audit engagement” shall mean a reasonable assurance engagement in which a professional accountant in public practice expresses an opinion whether financial statements give a true and fair view in accordance with an applicable financial reporting framework”.
3. Measures to be taken in case of imminent breach. Repealed

For official notification of amendments, please visit https://resource.cdn.icai.org/72973bos58797.pdf.

For official notification of study guidelines, please visit https://boslive.icai.org/announcement_details.php?id=186.

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