The Institute of Chartered Accountants of India (ICAI) on Tuesday pitched the Forensic Accounting and Investigation Standards (FAIS).
In the last few years, the Board has encountered various financial irregularities at the corporate level in the diversion of funds, misuse of funds and to curb these difficulties the ICAI has come up with the idea of FAIS.
Forensic Accounting can be also called as data analytics wherein the data can be analyzed with the help of some tools while doing an investigation on the chain of entire diversions, where the money is going out, usage of money for other purposes apart from legitimate purpose, etc. in the landscape of accounting.
There is no standardization of forensic audits not only in India but also globally.
The proposed objectives of the FAIS is to codify best practices in the twin domains of Forensics and Investigations, set basic quality benchmarks for conducting assignments in these areas, and position the ICAI as a thought leader and regulator in these areas.
The ICAI endeavors to develop the standardization of forensic audits, proper guidelines, process, etc. which will not only improve the overall quality of audits but is also admissible in the court of law.
“In our profession, there are auditing standards for auditing services, likewise when we are doing forensic assignments, we need to develop the forensic standards, so ICAI is pioneering in developing the first-ever forensic standards for forensic auditing and forensic investigation. By the end of December, 2020 we will hopefully launch the forensic standards,” the President of ICAI, while addressing the virtual press conference said.
The Forensic Accounting and Investigation Standards will prove advantageous to the industry in terms of process standardization across the board; a collection of evidence-based on a process which may be subject to a high level of scrutiny in a court of law; will be used in all the professional assignments relating to engagement of Forensic Accounting and Investigation; and as the Forensic Auditor can identify the Fund Diversion, Siphoning of Funds and other related activities, relating to Corporate, these standards will be helpful to the Public Interest Entities as well.
“The project of developing Forensic Accounting and Investigation Standards (FAIS) is an outcome of extensive discussions within the ICAI on the need for the CA community to curtail its dependence on overseas literature and Standards, and instead develop its own set of intellectual property along the lines of the government’s vision of an “Atmanirbhar Bharat”. This FAIS is being prepared and drafted indigenously but will be helpful for the Forensic Professionals worldwide. The Forensic Accounting Profession will gain an importance in the Forensic Accounting world by a set of disciplinary approaches and will demonstrate Atmanirbharta in Forensic Accounting & Investigation,” CA. Atul Kumar Gupta, President, ICAI said.
The ICAI is the only Institute in the accounting world that is developing a full set of FAIS standards for its Forensic Professionals. In fact, such intellectual property can be the basis of exporting our CA services to the world, which is finding our extensive experience in this area highly unique and top-notch,” he added.
Recently, RBI has mandated that if there is any credit beyond Rupees 200 Crores it will require a compulsory forensic audit so the idea of forensic due diligence will be proposed to the larger companies in the times to come.
The ICAI has also proposed to pitch the idea internationally also.
