NFRA Launches Toolkits to Improve Audit Quality and Support Small & Medium Accounting Firms [Read Memorandum]

The National Financial Reporting Authority (NFRA) has released a new audit toolkit to help small and medium-sized accounting firms improve the quality of their audit work. The toolkit focuses on how to prepare and document an audit strategy, which is one of the most important parts of the audit process.

The document is titled “Audit Strategy Memorandum – A Sample Document,” part of the NFRA Staff Series. It serves as a sample or model that firms can use to understand how to plan and record their audit activities. The regulator said the toolkit is flexible and adaptable, so auditors can adjust it to fit the size, nature, and industry of the companies they audit.

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NFRA clarified that this document is meant only for education and awareness. It is not a policy or rule, and it should not be treated as an official standard. The facts and examples in it are entirely hypothetical and are meant to guide learning.

The 34-page sample document shows, step by step, how an audit team might prepare an audit strategy for a fictional company called ABC Limited.

It includes sections on understanding the client’s business, holding planning meetings, assessing risks, evaluating internal controls, determining materiality, and designing audit procedures. It also includes guidance on how to plan for group audits, use of specialists, and allocate work among team members.

NFRA said the aim of releasing such toolkits is to raise audit quality across India, particularly among smaller firms that may not have access to advanced training or global best practices.

The regulator has been conducting outreach programmes in cities such as Hyderabad and Indore to share knowledge and receive feedback from audit professionals.