The government expedited the regulatory changes in 2025 with the aim of promoting homegrown audit and advisory firms, and making a few of them of global size. The coming year will see further progress on this front.
An inter-ministerial group focussing on developing an ecosystem where the domestic firms can grow in size to compete with the Big Four firms has just been set up. The group is considering sweeping changes in the existing regulations that will allow audit firms to advertise, form cross-border alliances, and enable professionals from different fields such as chartered accountants (CAs), company secretaries, lawyers, and actuaries to work together under a single firm structure.
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Breaking Silos with MDPs
In a September note on setting up of Indian multi-disciplinary partnership (MDP) firms, the ministry of corporate affairs (MCA) noted that the advertising ban for CAs limits them from building strong brands and compete on a global scale, especially against Big Four firms, who can freely advertise and establish market visibility abroad. “There should be a distinction between professional brand-building (logos, sponsorship of professional events) on one hand and solicitation and advertising (advertising on TV and social media) on the other hand,” the note said. It’s expected that the government will speed up the work on this front to fulfill the agenda.
On its part, the Institute of Chartered Accountants of India (ICAI) has tweaked its code of ethics (CoE) to allow liberal advertising and greater independence to CAs. “In addition to putting restrictions like allowing not more than 60 audit assignments per partner in a year, the revised CoE has been liberal on advertising, and also focussed on enhancing independence,” said Subodh Kumar Agrawal, former president of ICAI.
Balancing Oversight and Local Firm Growth
Besides this, the ICAI has laid down revised SA 600 standards, a framework for the principal auditors to rely on the work of component auditors when auditing consolidated financial statements. The institute said that the revised standard establishes accountability parameters for both the principal auditor and the other auditor. “The standard enables the principal auditor to review component records, visit the component, perform direct audit procedures, and issue a modified opinion if required,” ICAI note had said.
Till last year, the National Financial Reporting Authority (NFRA) and the ICAI were at odds, especially because the NFRA had suggested the revision of SA 600 in line with the ISA 600 (international standards). ICAI cited that the alignment with ISA 600 is likely to affect the small and mid-size audit firms, and benefit the large firms.
Through the revised standards, ICAI claims that the issues with NFRA are more or less settled. However, experts said that there are still some differences on SA 600 which need to be resolved.
Meanwhile, NFRA has been busy conducting nationwide audit workshops and outreach programmes to enhance the audit quality, particularly among small and medium-level audit firms. The stakeholder engagement is likely to accelerate in 2026 after the initial encouraging response.
The year also saw domestic audit firms openly supporting the Comptroller & Auditor General of India’s (CAG’s) decision to engage CAs and limited liability partnership (LLP) firms for auditing the financial statements of autonomous, local and other bodies.
Ashok Haldia, former secretary, ICAI said that the profession in 2026 will remain in a transient phase – shifting from traditional auditing to technology-driven transformation. “Societal expectations will require proactive detection of frauds rather than retrospective reporting. The profession will face heightened heat on the regulatory changes to create big local firms, and for improving the quality of financial reporting more than ever before,” he said.