Category: ICAI And Its Members

A. ICAI NOTIFICATION

1. ICAI (GLOBAL NETWORKING) GUIDELINES, 2025

The Institute of Chartered Accountants of India has notified the ICAI (Global Networking) Guidelines, 2025 vide Gazette Notification dated 11th February 2026, enabling Indian CA firms to formally network with global professional entities.

OBJECTIVE AND SCOPE

The Guidelines establish a comprehensive regulatory framework enabling domestic CA firms, networks, and entities registered with ICAI to enter into structured networking arrangements with overseas entities. The framework aims to enhance the global competitiveness of Indian CA firms, foster knowledge and technology sharing, improve service quality, and bring Global Networks under the regulatory oversight of ICAI in respect of their Indian operations.

APPLICABILITY

The Guidelines apply to:

• ICAI-registered CA firms;
• Management consultancy entities registered with ICAI;
• Domestic networks formed under earlier Networking Guidelines;
• Any domestic entity entering into networking/affiliation/association with foreign entities.

The Guidelines are effective from the date of publication in the Official Gazette.

KEY DEFINITIONS

Important concepts clarified include:

• Domestic Entity – ICAI-registered firm, network or management consultancy entity.
• Foreign Entity – Any entity established outside India providing or facilitating professional services (including accounting and assurance).
• Global Network – A written arrangement between a domestic entity and foreign entity involving cost sharing, common branding, shared resources, quality control, systems, etc.
• Nodal Officer – A full-time practicing ICAI member in good standing responsible for compliance and liaison.

The definition of “network” is substance-based and includes arrangements involving:

• Common brand name/logo,
• Shared quality control policies,
• Shared systems, technical resources, training,
• Cost-sharing structures,
• Shared professional personnel.

KEY FEATURES

The Guidelines introduce a formal two-stage registration process — first, approval of the name of the Global Network (Form AGN, fee: ₹10,000), followed by registration (Form BGN, fee: ₹30,000). Each Global Network must have a distinct ICAI-approved name with the suffix “Global Network.” Domestic entities may be constituents of more than one Global Network.

A Nodal Officer — a senior member of ICAI in good standing and must be managing partner/CEO/MD or equivalent with highest profit/capital share — must be designated for each Global Network to ensure ongoing regulatory compliance, annual reporting, and communication with ICAI.

ANNUAL REPORTING AND COMPLIANCE

Registered Global Networks are required to file an Annual Return (Form DGN) within 120 days of the close of each financial year, disclosing details of revenue, fees exchanged with overseas entities, disciplinary proceedings, and other material information. All information so submitted will be treated as confidential.

ETHICAL AND REGULATORY SAFEGUARDS

The Guidelines require strict compliance with ICAI’s Code of Ethics, the Chartered Accountants Act, 1949, and all applicable Indian laws. Key restrictions include prohibition on performing services barred under Section 144 of the Companies Act, 2013 for audit clients, and prohibition on fee/profit sharing with non-ICAI registered entities. Any violation constitutes professional misconduct.

POST-REGISTRATION CHANGES AND DE-REGISTRATION

Prescribed forms have been notified for reporting changes in the constitution of a Global Network (Form CGN), de-registration (Form EGN), and withdrawal of name approval (Form FGN). ICAI retains full jurisdiction over acts and omissions during the registration period even after de-registration.

PERMITTED FRAMEWORK OF ARRANGEMENTS

Permissible networking arrangements include:

• Access to global tools and digital platforms.
• Technology and process sharing.
• Quality control alignment.
• Access to international assignments.
• Participation in M&A, due diligence, cross-border engagements.
• Payment/receipt of network fees (one-time or recurring), subject to compliance.

However, mere referral arrangements may not constitute a network unless broader structural integration exists.

PROHIBITED SERVICES

The following are expressly restricted:

1. Prohibited services under Section 144 of Companies Act, 2013 to audit clients.
2. Fee sharing with non-members unless permitted under ICAI Code of Ethics.
3. Any activity violating ICAI Code, CA Act or Regulations.
4. Activities not conducted at arm’s length.

The Nodal Officer must ensure maintenance of documentation supporting arm’s length nature of transactions.

CONSEQUENCES OF NON-COMPLIANCE

ICAI retains regulatory oversight powers to:

• Seek additional documentation at any time.
• Withdraw name approval.
• Cancel registration.
• Initiate disciplinary proceedings.
• Require exit from non-compliant network within 30 days.

Non-compliance constitutes professional misconduct under the CA Act, 1949. Disciplinary action may arise in cases such as:

• Claiming to be part of unregistered global network.
• Failure to furnish information.
• Non-filing of prescribed forms.
• Including entities in violation of guidelines.
• Indirect benefit from non-compliant networking arrangements.

https://egazette.gov.in/WriteReadData/2026/270214.pdf

2. UDIN PORTAL – ICAI

The following important updates implemented at the UDIN Portal:

i. Ceiling on UDIN Generation for Tax Audits under Section 44AB (w.e.f. 1st April 2026)

In accordance with the Council’s decision at its 442nd meeting, a ceiling on the maximum number of UDINs generated will be implemented from 1st April 2026, in line with the prescribed limit of 60 Tax Audits. This ceiling will apply to Form 3CA and Form 3CB sub-categories under Section 44AB. Field-level validation has already been activated at the UDIN Portal across all sub-categories under Section 44AB [Clauses (a) to (e)] under the ‘GST and Tax Audit’ category.

https://udin.icai.org/ICAI/announcement/6/148/UDIN_11-02-2026

ii. UDIN Validation Now Based on Five Parameters

The PAN of the assessee has been added as a mandatory field for UDIN generation under the ‘GST & Tax Audit’ category. Accordingly, UDINs will now be validated at the CBDT e-Filing Portal based on five parameters: MRN, UDIN, AY/FY, Form No., and PAN of the assessee. The PAN information will remain confidential and will not be visible to any third-party verifier.

https://udin.icai.org/ICAI/announcement/6/145/UDIN_20-12-2025

iii. Disclosure of Preceding Year’s Audit Details during UDIN Generation

Succeeding auditors will now be required to provide details of the preceding year’s audit while generating UDINs under the ‘GST & Tax Audit’ and ‘Audit & Assurance Functions’ categories. This information will be confidential and not disseminable to any third party.

https://udin.icai.org/ICAI/announcement/6/146/UDIN_20-12-2025

For any clarification, members may write to: udin@icai.in

B. EMPANELMENT

Empanelment of Members to Act as Observers at the Examination Centres for The Chartered Accountants’ Examinations, May 2026.

It is proposed to empanel members to act as Observers for the forthcoming May -2026 Chartered Accountants Examinations scheduled to be held in May 2026. The honorarium of ₹3,750/- per day / per session and ₹500/- as conveyance reimbursement for ‘A’ class cities and ₹400/- for other cities per day (to cover cost of local travel) will be paid. A member who fulfills the above-mentioned eligibility criteria, and is desirous of empaneling himself / herself for the assignment, may do so, online at http://observers.icaiexam.icai.org

Timelines:

• Opening of the window for empanelment – 20th February 2026 (Friday)
• Closing of the window for empanelment – 19th March 2026 (Thursday)

https://resource.cdn.icai.org/90941exam-aps4120.pdf

C. INVITATION TO COMMENT | EXPOSURE DRAFT

Standard on Auditing for Less Complex Entities (SA for LCE)

The ICAI has proposed to introduce a dedicated Standard on Auditing for Less Complex Entities (SA for LCE) — a tailored auditing standard designed to reflect the specific nature and circumstances of audits of LCEs in both the private and public sectors.

The standard aims to achieve reasonable assurance that financial statements of LCEs are free from material misstatement, whether due to fraud or error, while ensuring consistent performance of quality audit engagements. Key highlights include:

Specifically designed for audits of complete sets of general purpose financial statements of LCEs, with provisions for adaptation to special purpose financial statements or specific elements/accounts, where applicable

• Premised on the firm being subject to SQM 1, with quality audit engagements achieved through proper planning, performance and reporting in accordance with professional standards and applicable legal and regulatory requirements
• Requires the exercise of professional judgment and maintenance of professional skepticism throughout the engagement
• Use is optional — even where an entity qualifies as an LCE, the auditor may, at their professional discretion, choose to conduct the audit under the full set of Standards on Auditing instead. But when an audit engagement is conducted using this standard, the Standards on Auditing (SAs) do not apply to that engagement. This standard serves as a standalone framework for eligible LCE audits. If used beyond the scope contemplated in Part A, the auditor is not permitted to represent compliance with the SA for LCE in the auditor’s report.
• Where the auditor opts for the full SAs, the audit must be planned, performed and reported accordingly, and compliance with the SA for LCE cannot be represented in the auditor’s report
• The standard does not override applicable local laws or regulations, and auditors remain responsible for ensuring compliance with all relevant legal, regulatory and professional obligations

https://resource.cdn.icai.org/90639aasb-aps4044.pdf

Members are invited to share their comments on the above Exposure Draft by March 20, 2026.

Comments may be submitted to:

Secretary, Auditing and Assurance Standards Board The Institute of Chartered Accountants of India ICAI Bhawan, A-29, Sector – 62, Noida – 201 309

Email: aasb@icai.in

D. ICAI PUBLICATION

1. Practitioner’s Guide on Drafting of Modified Opinions in Independent Auditor’s Reports

The AASB of ICAI has released the “Practitioner’s Guide on Drafting of Modified Opinions in Independent Auditor’s Reports” — a practical resource to help auditors draft clear and appropriate modified opinions in compliance with the Standards on Auditing.

The Guide covers:

• Overview of modified opinion concepts and types
• Guidance on presentation and headings in auditor’s reports
• Illustrative formats for Qualified, Adverse, and Disclaimer of Opinion
• Examples across commonly encountered audit areas and circumstances

Building on earlier publications — the Implementation Guide on Reporting Standards (2018) and Analysis of Modified Opinions (2023) — this Guide serves as an additional layer of practical support for auditors.

https://resource.cdn.icai.org/90889aasb110225.pdf

2. Guidance on New Labour Codes

The AASB of ICAI has release the “Guidance on New Labour Codes” — a comprehensive resource designed to assist auditors in navigating the audit implications arising from the implementation of the new Labour Codes.

The implementation of the Labour Codes introduces significant auditing considerations, including assessment of risks of material misstatement, compliance with applicable laws and regulations, appropriate accounting treatment for employee-related costs and liabilities, and adequacy of financial statement disclosures.

The Guidance addresses key areas commonly encountered in audit engagements, including:

• Payroll-related expenses, employee benefit provisions, and statutory dues
• Understanding the entity’s workforce structure and management’s response to the Labour Codes
• Designing audit strategies and conducting engagement team discussions on risk assessment
• Performing appropriate control and substantive procedures
• Management representations and communication with those charged with governance
• Audit documentation and reporting considerations, including modifications to the auditor’s opinion, Emphasis of Matter paragraphs, and reporting under CARO and internal financial controls, where applicable

This Guidance, developed with reference to the applicable Standards on Auditing, seeks to equip members with practical direction in effectively discharging their audit responsibilities in the evolving regulatory landscape of labour law reforms.

https://resource.cdn.icai.org/90779aasb-aps4103-guidance.pdf

3. Technical Guide on Revised Directions issued by CAG under Section 143(5) of the Companies Act, 2013

The AASB of ICAI has released the “Technical Guide on Revised Directions issued by CAG under Section 143(5) of the Companies Act, 2013” — a focused resource to assist auditors of Government companies and Government-owned/controlled companies in effectively responding to the revised directions issued by the Comptroller and Auditor General of India (CAG).

Government company audits are governed by the specific framework under Section 143(5) of the Companies Act, 2013, which empowers the CAG to issue directions to auditors on the manner of audit. In exercise of these powers, the CAG issued revised directions vide letters dated 23rd May 2025 and 17th October 2025, requiring auditors to focus on the following high-impact thematic areas:

•  Fair valuation of investments made for post-retirement employee benefits
• IT-based processing of accounting transactions, with emphasis on IT controls and cybersecurity-related controls
• Accounting and utilisation of Government grants/subsidies
• Risk management policy for key risk areas, and identification & valuation of data assets
• Compliance with applicable legal and regulatory requirements

Recognising the practical challenges auditors may face in interpreting these directions and aligning their audit procedures and reporting responses, the AASB has developed this Technical Guide to provide direction-wise guidance on audit approach and reporting considerations, along with illustrative reporting formats to promote clarity, consistency and quality in auditors’ responses.

https://resource.cdn.icai.org/90773aasb-aps4101-announcement.pdf

4. FAQs on Unique Document Identification Number (UDIN)

The Sixth Edition of the FAQ on UDIN incorporates the latest developments, member feedback, statutory updates, evolving use cases, and technological enhancements. This edition aims to serve as a comprehensive guide for practicing members and an authoritative reference for stakeholders who rely on CA-certified documents.

https://resource.cdn.icai.org/90857faqudin2026.pdf

5. Meetings of Committee of Creditors – A Handbook for the Guidance of Insolvency Professionals (Revised February 2026 Edition)

The Insolvency & Valuation Standards Board of ICAI has released the second and updated edition of reference publication for Insolvency Professionals titled “Meetings of Committee of Creditors – A Handbook for the Guidance of Insolvency Professionals (Revised February 2026 Edition)”.

The Committee of Creditors (CoC) plays a central role in the corporate insolvency resolution process, and the effectiveness of the resolution process depends significantly on their informed, transparent and timely decision-making. This revised handbook has been updated to incorporate recent regulatory developments, circulars and judicial pronouncements that directly impact the functioning of the CoC.

The handbook provides comprehensive guidance on:

• The legal framework governing CoC meetings, including convening, conduct, quorum, voting mechanisms, and documentation of decisions
• Best practices and procedural discipline to ensure meetings are conducted fairly, transparently and efficiently, consistent with the principles of natural justice
• Timely issuance of notices and agendas, and adequate dissemination of information to enable informed decision-making
• Maintenance of neutrality and independence by the Resolution Professional, and proper recording of deliberations and voting outcomes
• Fiduciary responsibilities of CoC members, the exercise of collective and commercial wisdom in good faith, and balancing stakeholder interests while maximising the value of the corporate debtor

https://resource.cdn.icai.org/90897ivsb120226.pdf

6. Issues and Recommendations emerging from the deliberations at International Convention on Insolvency Resolution and Valuation: RESOLVE-2025 by I&VSB ICAI

The Insolvency & Valuation Standards Board, in association with the Insolvency and Bankruptcy Board of India (IBBI), Indian Institute of Corporate Affairs (IICA), Indian Institute of Insolvency Professionals of ICAI (IIIPI), and ICAI Registered Valuers Organisation (ICAI RVO), hosted the 3rd International Convention on Insolvency Resolution and Valuation – RESOLVE 2025.

Based on deliberations held at RESOLVE-2025, the Board has prepared a consolidated publication capturing key issues and recommendations emerging from the discussions at the Convention.

https://resource.cdn.icai.org/90890ivsb-yash-11.pdf

E. RESEARCH REPORTS

1. Reprioritising Environmental Claims under the Insolvency and Bankruptcy Code

The research report ‘Reprioritising Environmental claims under the Insolvency and Bankruptcy Code’ delves into the “Polluter Pays Principle” and examines the intricate interface between the Insolvency and Bankruptcy Code (IBC) and environmental liabilities, while identifying legislative pathways to effectively integrate environmental claims within the resolution framework.

2. Mahua Flowers: Regulatory, Economic and Social Opportunities

The research report on “Mahua Flowers: Regulatory, Economic and Social Opportunities” analyses the current harvest and utilization scenario of Mahua flowers and provides targeted suggestions for policy initiatives and scalable use cases. Its core objective is to offer pathways to sustainably unlock value from both a social upliftment and an economic growth perspective.

3. REITs and Their Emerging Significance in India: A Regulatory, Market and Professional Perspective

The report offers a comprehensive overview of the REIT ecosystem, covering global benchmarks, India’s regulatory and taxation framework, governance practices, market developments, and the emerging SM REIT structure. It identifies key challenges to wider adoption — including tax clarity, transaction costs, investor awareness and institutional participation — and provides practical recommendations at the policy, market and operational levels.

The report also highlights the growing role of Chartered Accountants in this space, with expanding opportunities in financial reporting, assurance, valuation, taxation, regulatory compliance and ESG reporting, as REITs continue to bridge the real estate and capital markets in India.

https://resource.cdn.icai.org/90859reit-ya-11.pdf

4. Revitalizing India’s Legal Landscape: Addressing Obsolete Economic and Commercial Laws for A Viksit Bharat @ 2047

The report examines the reliability and relevance of India’s current statutory frameworks through doctrinal analysis and empirical feedback from professional stakeholders. It identifies economic and commercial laws that need strengthening in line with the objectives of Viksit Bharat @ 2047, and aims to support the creation of a contemporary legal system that fosters entrepreneurship, fair competition and robust institutional governance — positioning India as a leading global economy by 2047.

https://resource.cdn.icai.org/90860rilld-ya-11.pdf

F. OPINION

Accounting for commission paid for performance bank guarantees, under Ind AS framework

a. Facts of the Case

• The company, a JV of two PSUs, obtained PNGRB authorisation to develop CGD networks and was required to furnish a Performance Bank Guarantee (PBG) of ₹1,948 crore as a precondition.
• The promoters provided the PBG and recovered the bank guarantee (BG) commission from the company through debit notes with GST.
• The company capitalised the BG commission as part of CWIP under AS 16 and depreciated it after commissioning.
• During supplementary audit for FY 2023-24, C&AG objected, stating that capitalisation overstated profit and assets and that the commission should be expensed.
• The company defended its treatment on the basis that furnishing the PBG was mandatory for project execution and relied on Ind AS 16 and earlier EAC opinions.

B. QUERY

The querist sought EAC opinion on:

1. Whether capitalisation of BG commission of ₹13.44 crore relating to the PBG is correct under AS 16.
2. If not, what should be the appropriate accounting treatment.
3. If a change is required, whether it should be treated as change in estimate, accounting policy, or prior-period error.

C. POINTS CONSIDERED BY THE COMMITTEE

• The Committee confined itself to accounting for BG commission paid to promoters and did not examine other project accounting matters.
•  It noted that no borrowing was taken by the company and the BG commission did not relate to borrowings; therefore AS 23 was not applicable.
• Under AS 16, only costs directly attributable to bringing the asset to the location and condition necessary for intended use can be capitalised.
• “Directly attributable” costs are those necessary for construction activity and without which the asset cannot be made ready for use.
• The Committee observed that BG commission is incurred to obtain authorisation (PBG) and not for construction of the asset.
• Although furnishing PBG is essential for obtaining the project, the commission does not add value to construction nor bring the asset to operating condition.
• Further, the BG commission does not create a resource controlled by the company, and hence cannot be recognised as a separate asset.

D. OPINION

The Expert Advisory Committee opined that:

1. Capitalisation of BG commission is not appropriate.
2. The BG commission should be recognised as an expense in the Statement of Profit and Loss as and when incurred.
3. Since the existing treatment is not in accordance with Ind AS, it should be rectified in the current reporting period as an accounting error in accordance with Ind AS 8, with retrospective correction as required.

https://resource.cdn.icai.org/.pdf

BCAJ Admin

BCAJ Admin

The disciplinary body, after examining the evidence produced
by the parties, held that the member was guilty of “other misconduct”. The
council accepted this finding and referred the matter to the High Court to award
punishment to the member by removing his name from the Register of Members for
three months.

The Delhi High Court has held that there is no definition of
the expression “other misconduct” in the C.A. Act. Therefore, the High Court
held that the interpretation of this expression should be left to the council of
ICAI. The council is the disciplinary body comprised of peers who have several
years of experience. Further, the High Court held that in this case, the member
was unable to demonstrate that the above decision of the council and its
recommendation for punishment was either procedurally flawed or that on merits
it was perverse or mala fide. Therefore, the High Court accepted the finding of
the council and ordered that the name of the member be removed from the Register
of Members for a period of three months.

The Ethical Standards Committee of ICAI has clarified some
issues for the benefit of its members on page 1216 of C.A. Journal, February
2010 issue. Some of the issues are listed
below.

3. Accounting for foreign
exchange variation prior to commencement of commercial operation

BCAJ Admin

BCAJ Admin