The forensic accounting and investigation standards have “adequate flexibility to address unique situations” and will ensure uniformity in forensic audits carried out by financial institutions, according to chartered accountants’ apex body ICAI.
Institute of Chartered Accountants of India (ICAI) has issued 13 Forensic Accounting and Investigation Standards (FAIS). There are also three overarching documents. These have been issued by the institute’s Digital Accounting and Assurance Board.
ICAI President Nihar N Jambusaria told PTI that another eight standards are in the pipeline.
Forensic audits play a key role in assessing the financial health of institutions, especially banks and their loan portfolios.
When asked whether the standards will help in ensuring uniformity in forensic audits conducted by banks and other financial institutions, Jambusaria replied in the affirmative.
“Absolutely, there will be uniformity in forensic audits conducted by banks and other financial institutions. The overall quality of the engagements will also improve.
“FAIS will also be useful to the law enforcement agencies, corporates, banks and other stakeholders to appreciate the common practices and finer nuances of conducting forensic accounting and investigation engagements,” he said.
The FAIS is a minimum set of requirements that apply to all ICAI members.
According to Jambusaria, the institute’s council at an appropriate time decides to make the FAIS mandatory and if deemed suitable in a phased manner.
“The mandatory nature of FAIS implies that while carrying out any forensic accounting and investigations, it shall be the duty of the professional to ensure that they comply with the standards. Hence, ICAI standards are binding only on ICAI members,” he noted.
Each of these principle-based standards operates within a pre-defined framework and seeks to ensure a consistent application of basic principles, best practices and standards, he said, adding that they also provide adequate flexibility to address unique situations.