Copyright thehindubusinessline
Keeping the government’s vision of developing big desi multi-disciplinary partnership firms, the Institute of Chartered Accountants in India (ICAI) has proposed major changes in its code of ethics. These include new norms on sustainability assurance, audit independence, fee dependency, and advertising practices. ICAI has invited suggestions on the Exposure Drafts of the Code of Ethics, which can be submitted till November 26. According to a communication by the institute, the revised draft aims to update the 12th Edition of the Code of Ethics, which has been in effect since July 1, 2020. New Chapter A new chapter has been proposed to be added to Volume 1. Titled ‘Ethics Standards for Sustainability Assurance,’ it outlines requirements for sustainability assurance providers while providing sustainability assurance engagement. It is based on the International Ethics Standards for Sustainability Assurance. Another proposal is about a change in terminology, ‘professional accountant’ replaced with ‘Chartered Accountant’. Similarly, ‘professional accountant in public practice’ will be replaced with ‘Chartered Accountant in practice’ and ‘professional accountant in service’ to be replaced with ‘Chartered Accountant in service.’ According to proposals, amendments to the guidelines for practice in Corporate Form to include services such as forensic accounting, administrative services, research analysis recognised by a regulator, social impact assessment and evaluation, CSR impact, business responsibility and sustainability reporting, and artificial intelligence and permitting the development of websites, subject to requisite amendments. Also, there is a proposal to make changes in Council Guidelines for Advertisement, 2008, to make them more contemporary, including the inclusion of ‘Contemporary form’, ‘Directories’, in the definition of ‘Write-up’, removal of the limit of font size and the requirement to mention membership number/FRN. Amendments to the Website Guidelines to align them with present times, and making the same applicable to recognised domestic networks also have also been proposed. Audit limits As per the draft, Practising CAs would be permitted to form partnerships with other professionals under insolvency professional entities (IPEs) and resolution vehicle entities (RVEs). The draft has proposed changes to the guidelines on fees and auditor independence. It has proposed the insertion of new independence provisions, like non-acceptance of audit work for public interest entities (PIEs) such as listed companies, where the auditors have provided non-audit services to the same company. ICAI’s move to add these provisions comes after the National Financial Reporting Authority (NFRA) has pointed out issues with the auditors’ independence in many of its annual inspection reports of top audit firms. On the fee front, the ICAI has raised the reporting threshold to 20 per cent for PIEs (Public Interest Entities). Besides, the draft has changed the definition of PIE to include an entity one of whose main functions is to take deposits from the public. “We believe that changes are aligned with the broader vision of the government to create large audit and advisory firms out of India. These amendments will also help in forming Multi-Disciplinary Partnership firms that can provide unregulated and regulated services like auditing, secretarial, and legal under a single firm,” said Prateek Agarwal, Partner, Nangia & Co LLP. Published on October 29, 2025
