NEW DELHI: The National Financial Reporting Authority (NFRA) has released a paper related to the audit of accounting estimates and judgements as part of efforts to enhance communication between auditors and audit committees of companies. The initiative is aimed at improving overall audit quality.
During its enforcement, review and monitoring activities, the watchdog found issues related to auditors’ communication with those Charged With Governance (TCWG), including the audit committees, at the companies.
On Friday, NFRA released the first in the series of its auditor-audit committee interactions titled ‘Audit of Accounting Estimates and Judgments – Part 1: Expected Credit Losses (ECL) under Ind AS 109′.
The regulator said the aim is to suggest measures for improvement in overall audit quality and to promote awareness and significance of accounting and auditing standards, auditor’s responsibilities, audit quality as well as investor protection.
In a release, the regulator said the series will be issued on significant areas of accounting and auditing, from time to time.
Series 1 pertains to potential questions the audit committees/board of directors of companies may ask auditors in respect of accounting estimates and judgments.
“Within that, this communication being the first in this series, includes aspects pertaining to the audit of Expected Credit Losses (ECL) for financial assets and other items as required by Ind AS 109, Financial Instruments,” the release said.
