ICAI Releases Draft Auditing Standards for LLPs in India, Seeks Public Comments by January 6

December 6, 2023 Posted by India Briefing Written by Melissa Cyrill Reading Time: 4 minutes

The Institute of Chartered Accountants of India has released an exposure draft proposing new auditing standards for limited liability partnerships (LLPs) in India to align them with prevailing corporate auditing norms. It is open for public comments until January 6, 2024,

New auditing standards for limited liability partnerships

Having initiated the development of accounting standards for LLPs, the ICAI recently unveiled an exposure draft outlining the proposed auditing standards for LLPs.

The Auditing and Assurance Standards Board (AASB) of the Institute, responsible for issuing the exposure draft, has called for public comments by January 6, as stated in a November 22, 2023 notification.

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Section 34A of the Limited Liability Partnership Act, 2008 mandates that the Central Government, in consultation with the National Financial Reporting Authority (NFRA) established under section 132 of the Companies Act, 2013, has the authority to prescribe Auditing Standards. These standards are based on the recommendations provided by the ICAI, constituted under section 3 of the Chartered Accountants Act, 1949, specifically for certain classes of limited liability partnerships.

The Auditing and Assurance Standards Board, in the most recent exposure draft, stipulates that all 35 auditing standards applicable to corporations should be applied “mutatis mutandis” to the audit of LLPs.

The ICAI has conveyed its recommendations to the NFRA concerning 35 Auditing Standards for their potential notification under Section 143(10) of the Companies Act, 2013, pertaining to the audit of companies. ICAI asserts that these Auditing Standards, originally intended for company audits and recommended by ICAI to NFRA, should be applied with necessary modifications to the audit processes of limited liability partnerships.

Background

Until now, the Indian government has not legally mandated or specified the accounting and auditing standards that LLPs must adhere to. The recent exposure drafts from the Institute of Chartered Accountants of India are thus a response to the government’s efforts to enhance the regulatory framework surrounding LLPs.

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The government wants to increase its oversight of LLPs, compelling them to be more transparent and disclose any holders of “beneficial interest” in the contributions of their partners. The ICAI has also issued a recommended format for presenting financial statements by such entities.

In the past few years, there has been a growing inclination to establish LLPs due to various advantages, including reduced compliance requirements for such structures. The surge in LLP formations is attributed to stricter company disclosures. Notably, LLPs are exempt from the Auditor’s Report Order (CARO), resulting in fewer queries from auditors, according to experts.

Between April 2022 and September 2023, approximately 64,000 LLPs have been incorporated in the country. From April to November 2023, this number was 37,482.

Exposure Draft

The downloadable version of the Exposure Draft is available at the link : https://www.icai.org/post/ed-standards-on-auditing-for-limited-liability-partnerships-details

S.No.	Exposure Drafts of Standards on Auditing for Limited Liability Partnerships
1	Exposure Draft of SA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Standards on Auditing”
2	Exposure Draft of SA 210, “Agreeing the Terms of Audit Engagements”
3	Exposure Draft of SA 220, “Quality Control for an Audit of Financial Statements”
4	Exposure Draft of SA 230, “Audit Documentation”
5	Exposure Draft of SA 240, “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements”
6	Exposure Draft of SA 250, “Consideration of Laws and Regulations in an Audit of Financial Statements”
7	Exposure Draft of SA 260(Revised), “Communication with Those Charged with Governance”
8	Exposure Draft of SA 265, “Communicating Deficiencies in Internal Control to Those Charged with Governance and Management”
9	Exposure Draft of SA 299 (Revised), “Joint Audit of Financial Statements”
10	Exposure Draft of SA 300, “Planning an Audit of Financial Statements”
11	Exposure Draft of SA 315, “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment”
12	Exposure Draft of SA 320, “Materiality in Planning and Performing an Audit”
13	Exposure Draft of SA 330, “The Auditor’s Responses to Assessed Risks”
14	Exposure Draft of SA 402, “Audit Considerations Relating to an Entity Using a Service Organisation”
15	Exposure Draft of SA 450, “Evaluation of Misstatements Identified during the Audit”
16	Exposure Draft of SA 500, “Audit Evidence”
17	Exposure Draft of SA 501, ”Audit Evidence – Specific Considerations for Selected Items”
18	Exposure Draft of SA 505, “External Confirmations”
19	Exposure Draft of SA 510, “Initial Audit Engagements—Opening Balances”
20	Exposure Draft of SA 520, “Analytical Procedures”
21	Exposure Draft of SA 530, “Audit Sampling”
22	Exposure Draft of SA 540, “Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures”
23	Exposure Draft of SA 550, “Related Parties”
24	Exposure Draft of SA 560, “Subsequent Events”
25	Exposure Draft of SA 570(Revised), “Going Concern”
26	Exposure Draft of SA 580, “Written Representations”
27	Exposure Draft of SA 600, “Using the Work of Another Auditor”
28	Exposure Draft of SA 610(Revised), “Using the Work of Internal Auditors”
29	Exposure Draft of SA 620, “Using the Work of an Auditor’s Expert”
30	Exposure Draft of SA 700(Revised), “Forming an Opinion and Reporting on Financial Statements”
31	Exposure Draft of SA 701, “Communicating Key Audit Matters in the Independent Auditor’s Report”
32	Exposure Draft of SA 705(Revised), “Modifications to the Opinion in the Independent Auditor’s Report”
33	Exposure Draft of SA 706(Revised), “Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report”
34	Exposure Draft of SA 710, “Comparative Information – Corresponding Figures and Comparative Financial Statements”
35	Exposure Draft of SA 720(Revised), “The Auditor’s Responsibilities Relating to Other Information”

How to submit comments

Comments on abovementioned Exposure Draft may be submitted through any of the following modes.

1. Electronically:	Submit a comment letter at the link : https://forms.gle/kcWPzPSPgojWEm7w7
2. Email:	aasb@icai.in
3. Postal	Secretary, Auditing and Assurance Standards Board The Institute of Chartered Accountants of India ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi- 110002

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