ICAI issues standard on quality management for CA firms

The Institute of Chartered Accountants of India (ICAI) has come out with two new standards on quality management for accountancy firms.

The standard on quality management (SQM) 1 deals with a CA firm’s responsibilities to design, implement and operate a system of quality management for audits or reviews of financial statements, among others.

The SQM 2 dwells on the appointment and qualifications of the engagement quality reviewer, and the review process. The extant standard on quality control (SQC) will remain in force until the new ones are implemented, the institute said.


The SQM 1 and 2 come at a time when the ICAI and the National Financial Reporting Authority (NFRA) are locked in a tussle over the latter’s proposal to revamp the domestic audit standards in sync with the global ones.

The ICAI has already called for a “pause in the revision” of the domestic audit standards-- Standard on Auditing (SA) 600--as proposed by the NFRA.

For its part, NFRA was in talks with the ICAI to include the SQM in the revised SA600. NFRA has held that the inclusion will make the SQM binding on audit firms and improve the audit quality, among other things, ET has learnt.

However, the ICAI’s issuance of the SQM suggests the institute may not yet be keen on their inclusion in the revamped SA600, said a person aware of the matter.