Mon Sep 16 15:08:36 UTC 2024: ## CA Institute Mandates New Audit Quality Maturity Model for Major Audit Firms
The Institute of Chartered Accountants of India (ICAI), the world’s largest accounting and audit body, has announced the mandatory implementation of the second version of its Audit Quality Maturity Model (AQMM 2.0) for select audit firms.
This new model, developed by ICAI’s center for audit quality, will apply to firms auditing listed entities, banks (excluding co-operative banks, except multi-state co-operative banks), and insurance companies.
The implementation of AQMM 2.0 follows the successful rollout of its predecessor, AQMM v 1.0, which became mandatory in April 2023 for the same category of firms. However, firms conducting branch audits are exempt from this requirement.
AQMM 2.0 maintains the scope of its previous version, meaning it is also mandatory for firms auditing entities covered under AQMM v 1.0.
The ICAI introduced the AQMM framework in response to a series of high-profile fraud cases in India, including the Nirav Modi scam, the IL&FS crisis, and the collapse of DHFL, which highlighted concerns over audit quality and the ability of statutory auditors to identify corporate misconduct.
With approximately 96,000 audit firms in India, many of which are sole proprietorships, the ICAI aims to bolster audit quality through the self-evaluation matrix provided by AQMM 2.0. This model is unique to India, serving as a critical tool for improving audit practices and ensuring greater financial transparency.
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