I. ICAI Tools
ICAI MSME Verification Tool
This tool has been developed by the Centre for Audit Quality Committee (CAQC) of ICAI, as a facilitative tool to assist users in verifying the MSME status of an entity based on information available on the Government portal (https://www.udyamregistration.gov.in/)
https://forms.gle/hbMKkqzVxB4FCuJd6
II. ICAI Publications
1. DCMM 3.0 – Digital Competency Maturity Model Version 3.0 – Third version
DCMM 3.0 has been comprehensively updated to reflect the contemporary digital environment in which CA firms operate. The framework has been designed to help firms assess their present level of digital maturity, identify capability gaps and formulate a structured roadmap for continuous improvement.
2. Background Material on Non-Corporate Entities
This publication aims to provide preparers, auditors, reviewers, academicians and other stakeholders with greater conceptual clarity and practical insights into the application of the Guidance Note.
3. MCQs on Ind AS 117
This volume builds upon the foundation established in Volume I, extending coverage to advanced aspects of the Standard. The MCQs are designed not only to strengthen conceptual clarity but also to assess the application of the Standard through practical situations, transition challenges and interactions with other Indian Accounting Standards.
4. Corporate Restructuring Beyond IBC: Emerging Issues and Recommendations by IB and VSB, ICAI and CLC, ICAI.
This publication examines the evolving landscape of corporate restructuring beyond the Insolvency and Bankruptcy Code, 2016, addressing emerging legal, regulatory and commercial issues. It presents a comprehensive analysis of alternative restructuring mechanisms, identifies key challenges, and offers recommendations to strengthen India’s restructuring framework.
All Publications can be read at: https://publication.icai.org/
III. ICAI Announcements
1. Empanelment as faculty members for the Certificate Course
The Internal Audit Standards Board now invites applications from experienced professionals for empanelment as faculty members for the Certificate Course. Eligible members should possess:
- A minimum of five years of experience in the banking sector and/or concurrent audit of banks.
- Experience in delivering technical lectures, seminars, or training programmes for Chartered Accountants or other professional forums.
- Demonstrated expertise in one or more subjects covered under the Certificate Course.
Interested members are requested to submit their detailed profile/resume, clearly indicating their areas of expertise, professional experience, and teaching experience, through the following Google Form: https://forms.gle/Q95P1ori5BeHys5DA
Last date for submitting response is October 05, 2026.
2. ICAI AWARDS for Excellence in Financial Reporting 2025-26
To recognise and encourage excellence in preparation and presentation of financial information.
I. Public Sector Banks
II. Private Sector Banks (including Foreign Banks)
III. Life Insurance Sector
IV. Non-Life Insurance Sector
V. Financial Services Sector (including NBFC Other than Banking and Insurance)
VI. Manufacturing and Trading Sector (including entities engaged in processing, mining, plantations, oil & gas enterprises) (Turnover equal to ₹5000 crores or more)
VII. Manufacturing and Trading Sector (including entities engaged in processing, mining, plantations, oil & gas enterprises) (Turnover less than ₹5000 crores)
VIII. Service Sector (Other than financial services sector)
IX. Infrastructure and Construction Sector
X. Not-for-Profit Sector
XI. Public Sector Entities
XII. Co-operative Banks
Last date of Submission 15th October, 2026
More details: https://www.icai.org/post/research-committee
3. ICAI Sustainability Reporting Awards 2025-26
Launch of 5th ICAI Sustainability Reporting Awards 2025-26. Excellence in Sustainability Reporting Standards Board (BRSR).
Nomination period: 17th September 2026 to 15th November, 2026.
https://resource.cdn.icai.org/94300srsb-aps6327-brochure.pdf
IV. GIST of ICAI Opinions
1. Classification of Bank Fixed Deposits Held under Lien as Current or Non-Current Assets under Ind AS Framework
A. Facts of the Case
The Company, a Central Public Sector Enterprise, avails Bank Guarantee (BG) and Letter of Credit (LC) facilities from various banks. The arrangements include both general lien over the Company’s deposit portfolio and specific fixed deposits placed as margin money or security against individual BG/LC facilities. The deposits generally have an original maturity of less than twelve months.
During the supplementary audit for FY 2024-25, the C&AG auditor observed that certain bank deposits classified as current assets were held under lien against borrowings/BGs/LCs having claim periods extending beyond twelve months. The auditor contended that deposits amounting to ₹22,257.31 lakh, being subject to such long-term claims, were not realisable by the Company within its operating cycle and should therefore have been classified as non-current assets.
The Company contended that the deposits had original maturities of less than twelve months and were accordingly classified as current assets under Schedule III to the Companies Act, 2013.
B. Query
The Company sought the Committee’s opinion on the classification of bank fixed deposits having
an original maturity of less than twelve months but held under lien against BGs, LCs or borrowing facilities extending beyond twelve months from the reporting date.
The Company also sought clarification on whether classification should be determined primarily by the original contractual maturity of the deposit or by the period for which the underlying lien arrangement continues, and on the appropriate accounting treatment where deposits are held under general lien arrangements without specific linkage to individual BGs, LCs or borrowing facilities.
C. Points considered by the Committee
The Committee noted that classification of an asset as current or non-current has to be assessed at the reporting date based on the criteria in Ind AS 1 and Schedule III. For bank balances and fixed deposits, the relevant considerations are whether the asset is expected to be realised within twelve months and whether it qualifies as cash or a cash equivalent.
The Committee notes that Ind AS Schedule III requires bank balances other than cash and cash equivalents (which meet the definition of ‘current asset’) to be presented as ‘financial assets’ under ‘current assets’. Further, it requires ‘Balances with banks to the extent held as margin money or security against the borrowings, guarantees, other commitments’ to be disclosed separately.
The Committee observed that the classification cannot be based solely on contractual maturity. The substance or economic reality, including the Company’s expectation regarding realisation at the reporting date, has to be considered. Thus, where restrictions arising from lien arrangements are such that the deposit is not expected to be realised within twelve months, or the deposit is required to be continued or renewed to support long-term BG/LC/borrowing arrangements, it would not qualify as a current asset.
The Committee further considered the presentation and disclosure requirements under Division II of Schedule III. Bank balances held as margin money or security against borrowings, guarantees and other commitments are required to be disclosed separately.
D. Opinion
The Committee opined that bank deposits held under general or specific lien arrangements as margin money or security for guarantees or credit facilities should be presented as financial assets under current assets, with separate disclosure in the financial statements, provided that, despite the restrictions arising from the lien, the deposits continue to meet the definition of a current asset.
The Committee further opined that classification of the deposits cannot be based solely on their contractual maturity and must also consider the substance or economic reality regarding the expectation of realisation at the reporting date.
To read full opinion: https://resource.cdn.icai.org/94132cajournal-sep2026-opinion-1.pdf
2. Accounting treatment of expenditure incurred on repair, recovery and reinstallation of damaged subsea assets during construction phase of abc-field, under Ind AS framework
A. Facts of the Case
The Company, a major crude oil and natural gas producer, was developing an offshore oil field through LSTK contracts. During the development phase, two critical subsea assets—SDU-1234 and associated Umbilical UM-1234—were installed in February 2023. Subsequently, during demobilisation of a drilling rig, the SDU toppled and the umbilical was displaced by about 20 metres. Investigation indicated that the damage was most likely caused by the rig’s anchor. At that time, the subsea production system was incomplete and non-functional, and First Oil was achieved only on 7 January 2024 after the damaged assets were recovered, repaired, reinstalled and integrated.
The Company incurred approximately ₹309.77 crore towards the recovery, repair and reinstallation works and capitalised the expenditure as CWIP, subsequently transferring it to PPE. The Company considered the expenditure to be directly attributable to bringing the production system to the condition necessary for its intended use. The C&AG, however, objected to the capitalisation, contending that the expenditure represented abnormal amounts of resources and should not form part of the asset cost.
The Company also expected recovery of the reinstatement cost under the Contractor’s All Risks insurance policy. The Loss Adjuster had recommended a settlement, which had been accepted by management, although final confirmation from the insurer was awaited.
B. Query
The Committee was asked to opine on whether the expenditure incurred for reinstatement of the damaged subsea assets during the development/construction phase could be capitalised under Ind AS 16 and the ICAI Guidance Note on Accounting for Oil and Gas Producing Activities. It was also asked how the expected insurance proceeds should be accounted for: whether by reducing the cost of the related asset or by recognising the amount separately in profit or loss when it becomes virtually certain/receivable.
C. Points considered by the Committee
The Committee first observed that the subsea assets had already been installed and subsequently damaged during rig demobilisation. Therefore, the reinstatement expenditure represented subsequent rectification of damage rather than expenditure incurred to complete an unfinished construction activity. It accordingly had to be evaluated as subsequent expenditure under Ind AS 16.
The Committee noted that Ind AS 16 requires all PPE expenditure to be evaluated under its recognition principle. Accordingly, only expenditure directly attributable to bringing the asset to the location and condition necessary for its intended operation can be capitalised. Further, abnormal amounts of wasted material, labour or other resources cannot be included in the cost of PPE. Whether a particular expenditure constitutes an abnormal cost requires judgement based on the specific facts and circumstances, including the nature of the activity and normal practices in the relevant industry.
Importantly, therefore, the fact that the expenditure was incurred during the development/construction phase does not, by itself, make the entire reinstatement expenditure capitalisable. The Committee held that the Company must determine, on the facts, whether the expenditure is directly attributable under Ind AS 16 and whether any part represents abnormal costs. The resulting expenditure may accordingly be capitalised or charged to profit or loss.
The Committee also distinguished the damage/reinstatement expenditure from ordinary “repairs”. Since the assets had been damaged after their installation, the expenditure was subsequent expenditure and not routine day-to-day servicing. The Committee further noted that, when the damage occurred, the Company was required to assess any impairment under Ind AS 36, and determine whether any previously capitalised asset or component had to be derecognised because it no longer generated future economic benefits.
With regard to insurance recovery, the Committee applied the specific requirements of Ind AS 16 dealing with compensation from third parties. Compensation relating to impaired, lost or given-up PPE is a separate economic event and is recognised in profit or loss when it becomes receivable; it is not adjusted against the cost of the replacement or reinstated asset.
D. Opinion
The Committee held that the treatment requires judgement under Ind AS 16. The expenditure should be capitalised only to the extent it satisfies the recognition and measurement requirements, particularly the requirement of being directly attributable to bringing the PPE to the condition necessary for intended use. Any abnormal cost must be recognised in profit or loss. The Company must also assess impairment and possible derecognition arising from the damage.
The expected insurance proceeds relating to the damaged subsea assets are to be treated as compensation from a third party and recognised in profit or loss when they become receivable, rather than being deducted from the cost of the reinstated asset.
To read full opinion: https://resource.cdn.icai.org/94133cajournal-sep2026-opinion-2.pdf
3. Accounting Treatment of Restoration Obligation under a Service Concession Arrangement
A. Facts of the Case
The Company is an SPV established for execution of a railway gauge-conversion project under a 30-year Service Concession Arrangement with the Ministry of Railways. Under the concession agreement, the Company is required to keep the project assets in proper working condition and replace assets whose codal lives expire during the concession period, with the replacement cost being borne by the Company.
During the audit of FY 2023-24, the C&AG observed that the Company had not recognised a provision for the restoration/replacement obligation on the ground that a reliable estimate was not available. The C&AG considered that the obligation could be estimated and that a provision should be recognised.
In FY 2024-25, the Company estimated the total replacement/restoration obligation at ₹14,200 lakh over the remaining concession period. It recognised ₹1,045.25 lakh in FY 2024-25, and proposed to recognise the balance progressively over the remaining concession period. The C&AG considered this to be a short provision of ₹13,154.75 lakh and contended that the entire estimated obligation should be recognised.
The Company considered the obligation to be a maintenance/restoration obligation that arises progressively as the service potential of the railway assets is consumed. It therefore proposed systematic recognition of the expense over the concession period, with discounting and finance cost for the unwinding of the discount.
B. Query
The Committee was asked whether the Company’s approach of recognising the restoration obligation progressively over the period up to the date when the restoration obligation arises, by charging annual expenses and finance cost to the Statement of Profit and Loss, is appropriate under Ind AS.
It was also asked whether the C&AG’s suggested approach of recognising the entire estimated obligation upfront in the Statement of Profit and Loss would be appropriate.
C. Points considered by the Committee
The Committee proceeded on the basis that the arrangement falls within Appendix D to Ind AS 115 and that the Company’s restoration activities represent maintenance obligations, without any upgrade element. Under paragraph 21 of Appendix D, contractual obligations to maintain or restore infrastructure to a specified level of serviceability are to be recognised and measured in accordance with Ind AS 37 at the best estimate of expenditure required to settle the present obligation at the reporting date.
Under Ind AS 37, a provision is recognised only when there is a present obligation arising from a past event, an outflow of resources is probable and a reliable estimate can be made. The provision represents the best estimate of the expenditure required to settle the obligation. Where the time value of money is material, the provision is measured at present value and the unwinding of the discount is recognised as finance cost.
The Committee considered the nature of the Company’s obligation to be particularly relevant. The restoration obligation arises from the use of the project assets during the operating phase. Assuming that the service potential of the assets is consumed evenly over their useful lives, the best estimate of the obligation at each reporting date would increase progressively with the use of the assets. Accordingly, the provision should be increased through annual charges to profit or loss over the useful life of the respective assets until their expected replacement/restoration date.
The Committee therefore accepted the in-principle approach of building up the provision progressively, rather than recognising the entire estimated replacement cost upfront. However, it specifically stated that it had not examined the computation of the provision made by the Company.
D. Opinion
The Committee held that the restoration obligation arising from use of the project assets should be recognised and measured under Ind AS 37 at the best estimate of expenditure required to settle the present obligation at each reporting date.
Where the obligation increases proportionately with the use of the assets, the provision should be recognised progressively through annual charges to profit or loss over the useful life of the respective assets up to their expected replacement/restoration date. The provision should be discounted to present value where the time value of money is material, and the unwinding of the discount should be recognised as borrowing/finance cost in the Statement of Profit and Loss.
Accordingly, the Committee concluded that the in-principle approach followed by the Company of progressively recognising the restoration provision is in accordance with Ind AS 37, rather than recognising the entire ₹14,200 lakh obligation upfront. The Committee, however, did not examine the Company’s actual computation of the provision.
To read full opinion: https://resource.cdn.icai.org/94134cajournal-sep2026-opinion-3.pdf
V. ICAI Disciplinary Cases
4. AKK, Resolution Professional of MMDPL v. CA. RAD
Ref. No.: PR/196/2022/DD/263/2022 DC/1931/2024
Disciplinary Committee, Bench-I (2025-26)
Order dated: 5 February 2026
A. Facts of the Case
CA. RAD was the statutory auditor of MMDPL for FY 2018-19 and 2019-20 and had also certified various statutory e-forms, including Form AOC 4. The Company had availed a loan of ₹25 lakh from Paragon Finance Ltd. The loan was subsequently not repaid, resulting in dishonour of the repayment cheque and initiation of CIRP proceedings before the NCLT. The complainant, being the Resolution Professional, alleged irregularities in the Company’s financial statements and statutory filings.
B. Allegations
The principal allegations related to wrongful preparation and certification of financial statements and statutory forms for FY 2018-19 and 2019-20.
The Committee noted, inter alia, that the documents uploaded on the MCA portal contained:
- unsigned financial statements for FY 2019-20;
- absence of UDIN in the audit report;
- missing Notes to Accounts;
- incorrect computation of Reserves & Surplus;
- incorrect Net Worth and Turnover reported in Form AOC-4;
- differences in dates appearing on the financial statements and audit report; and
- absence of MGT-9 for the relevant years.
A further allegation was that the Respondent was unable to substantiate the financial figures reported in the financial statements and failed to produce the audit records/documents relied upon for his audit and certification.
C. Respondent’s Defence
The Respondent submitted that the signed financial statements were available with him but the client’s ROC consultant had inadvertently uploaded unsigned statements. He stated that UDIN had been generated but was not appearing in the uploaded PDF because of formatting issues. He also contended that the Notes to Accounts were prepared separately but were not uploaded by the Company/ROC consultant.
The Respondent further submitted that the discrepancies in figures were clerical in nature and that data entry in AOC-4 was undertaken by the Company’s staff. He attributed certain work to junior staff under his supervision and stated that the Company’s data had subsequently been tampered with or deleted from his system. He also denied responsibility for the Company’s loan default,stating that the loan was based on financial statements for FY 2017-18, which were not audited by him.
D. Findings of the Committee
The Committee held that attributing errors to junior staff or the Company’s ROC consultant did not absolve the Respondent of his responsibility as auditor and certifying professional. The ultimate responsibility for the accuracy, completeness and compliance of the audit report and certification remained with him.
On examination of the AOC-4 filings, the Committee found that the FY 2019-20 financial statements attached to the MCA filing did not contain the signatures of the Directors and Auditor, and the Notes to Accounts were missing for both years. It also noted the absence of UDIN in the FY 2019-20 audit report, incorrect Reserves & Surplus, and incorrect Net Worth reported in AOC-4. The Committee accordingly held the Respondent guilty of the first allegation.
With respect to the audit documentation, the Committee emphasised that a statutory auditor is required to obtain and retain sufficient and appropriate audit evidence supporting the audit opinion. The Respondent’s contention that the Company’s data had been deleted or tampered with did not absolve him. The Committee held that failure to maintain audit working papers and inability to substantiate the financial figures forming the basis of the audit report demonstrated gross negligence and lack of due professional care.
E. Conclusion
The Committee held CA. RAD guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, relating to failure to exercise due diligence or gross negligence in the conduct of professional duties.
F. Punishment
The Committee ordered:
Reprimand, fine of ₹1,00,000, as well as removal of the Respondent’s name from the Register of Members for three months. The fine was required to be paid within 60 days of receipt of the order.
5. S.P.C. vs. CA. P.K.G.
File No.: PR/70/2018/DD/124/2018/DC/1949/2024
Date of Order: 05.02.2026
(Findings dated 22.12.2025)
Statutory audit – incorrect reporting of statutory dues and auditor’s involvement in preparation of accounts.
Background
The Respondent was the statutory auditor of M/s BTCO and M/s MTCO for several years, reportedly up to FY 2014-15. The complaint concerned the Respondent’s audit of BTCO and principally related to reporting of statutory dues, his alleged involvement in preparation of the Company’s accounts, and non-disclosure of agreements for sale of three parcels of land.
Key Allegations
- In the Independent Auditor’s Report for FY 2014-15, the Respondent reported that BTCO was regular in payment of statutory dues, including Provident Fund, ESI, Income-tax and Sales-tax, although PF dues had remained unpaid for several years.
- The Respondent was alleged to have been involved in preparation and compilation of BTCO’s accounts for FY 2013-14, despite being its statutory auditor.
- Three agreements for sale of BTCO’s land were entered into in 2012, but the Respondent allegedly failed to disclose the transactions in the audit reports for FYs 2012-13 to 2015-16.
Respondent’s Defence
In relation to the PF dues, the Respondent contended that the demand relied upon by the complainant was raised after the audit report and that the PF dues were accrued but were not legally due because recovery proceedings had been stayed.
Regarding preparation of accounts, he denied preparing the financial statements and stated that he had merely suggested independent accountants and facilitated payment to them. In relation to the land transactions, he contended that only agreements for sale had been entered into, full consideration had not been received and the amounts received were appropriately shown under Other Current Liabilities.
Findings
The Committee found the Respondent’s reporting on PF dues to be contradictory. While his statutory audit report stated that BTCO was regular in payment of statutory dues, his own Tax Audit Report in Form 3CD disclosed that the Company was in default. The Committee therefore concluded that the Respondent was aware of the PF default. It rejected the argument that the stay of recovery proceedings extinguished the liability; according to the Committee, the stay merely suspended recovery. The non-disclosure therefore amounted to failure to report a material misstatement.
On preparation of accounts, the Committee relied on the Respondent’s bill dated 9 September 2014, which specifically charged BTCO for “Compilation and preparation of Accounts for the year ended 31st March 2014”. The Committee concluded that the Respondent was directly involved in preparing the financial statements. It held that subsequently auditing those accounts created a self-review threat and impaired auditor independence, contrary to Section 144 of the Companies Act, 2013 and the ICAI Code of Ethics.
However, the Committee rejected the allegation relating to non-disclosure of the land sales. The Respondent produced the break-up of Other Current Liabilities showing advances received against the proposed land sales and produced sale deeds establishing that the actual sales were completed only on 20.02.2018. Applying AS 9, the Committee held that the sales could not have been recognised in the earlier financial years because the significant risks and rewards had not yet been transferred. The accounting treatment was therefore found appropriate, and the Respondent was held not guilty on this allegation.
Charges Established
The Respondent was held guilty of professional misconduct under Items (6) and (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949: failure to report a material misstatement known to him and failure to exercise due diligence/gross negligence in professional duties.
Punishment
Reprimand and fine of ₹1,00,000, payable within 60 days of receipt of the order.
6. Case: M.K.S. vs. CA. S.K.T.
File No.: PR/G/234/2021/DD/195/2021/DC/1964/2025
Date of Order: 05.02.2026 (Findings dated 22.12.2025)
Failure of statutory auditor to report non-compliance relating to a single shareholder in a private company.
Background
The Ministry of Corporate Affairs directed the Serious Fraud Investigation Office (SFIO) to investigate the affairs of PIHL and its 21 group companies. The SFIO investigation concerned alleged collection of funds from investors through various camouflaged schemes.
The Respondent was the statutory auditor of RCPPL, a PIHL Group company, for FYs 2011-12 to 2014-15. The specific charge considered by the Disciplinary Committee related to the financial year 2012-13, when the Company’s financial statements disclosed that all 3,00,000 shares (100%) were held by PINPL.
Key Allegation
The Respondent was alleged to have failed to report/qualify his audit report for FY 2012-13 despite the Company having only one shareholder, contrary to Section 12 of the Companies Act, 1956, which required a private company to have at least two persons for its incorporation.
Respondent’s Defence
The Respondent stated that during the audit, he had noticed that the Company had only one shareholder and had advised the management to rectify the statutory non-compliance. According to him, the management subsequently transferred one share to Mr. BB, and this was reflected in the financial statements for FY 2013-14.
He therefore contended that corrective action had been taken before issuance of his audit report and, consequently, he did not consider it necessary to qualify the report. He also stated that there was no intention to suppress any fact or mislead stakeholders.
Findings
The Committee noted that the FY 2012-13 financial statements themselves disclosed 100% shareholding in PINPL, establishing that the Company had only one shareholder during that year. In the following year, PINPL held 2,99,999 out of 3,00,000 shares, indicating that one share had subsequently been transferred to another individual.
The Respondent was specifically asked to provide the dates on which the shares were transferred. He was unable to provide the dates, stating that the relevant shareholder register and share-transfer forms had been returned to the Company after audit.
The Committee held that Section 12 of the Companies Act, 1956 required a private company to have at least two persons, whereas RCPPL had only one shareholder as disclosed in its FY 2012-13 financial statements. The Committee also noted that, in response to questions from the SFIO, the Respondent had admitted that there was no reference to this fact in his audit report and that he had not qualified the report.
The Committee consequently concluded that the Respondent had failed to report the statutory non-compliance and had not exercised due diligence in disclosing a material fact known to him.
Charges Established
The Respondent was held guilty of professional misconduct under:
- Item (5), Part I of the Second Schedule – failure to disclose a material fact known to him which was necessary to be disclosed in the financial statements; and
- Item (7), Part I of the Second Schedule – failure to exercise due diligence / gross negligence in professional duties.
Punishment
Reprimand and fine of ₹1,00,000, payable within 60 days of receipt of the order.
