India to release forensic accounting and investigation standards, first country to do so

India will soon come up with forensic accounting and investigation standards (FAIS) as it aims to set basic quality parameters for conducting investigations.
The Institute of Chartered Accountants of India (ICAI) has constituted a committee to deliberate on FAIS, which are expected to be framed by the end of this year, said Atul Kumar Gupta, president of the chartered accountants body, during a virtual press conference on Tuesday.

“The proposed objectives of the FAIS are to codify best practices in the twin domains of forensics and investigations, set basic quality benchmarks for conducting assignments in these areas,” said an ICAI statement.

The ICAI said the move will make India the first country in the world to release a set of forensic accounting and investigation standards.

It was spurred by the lack of standardisation of forensic reporting and investigation leading to considerable differences in such reports.

The FAIS will comprise 30 standards covering all aspects of these domains.

Besides improving the quality of such reports and their admissibility as evidence in court proceedings, the move is expected to benefit corporate entities, banks, regulators and enforcement agencies such as the Serious Fraud Investigation Office, Economic Offence Wing and Reserve Bank of India (RBI), according to Gupta.

The RBI has mandated a forensic audit for transactions over Rs 200 crore while lenders or companies individually call for such audits or investigations upon suspected fraud.

“There should be forensic due diligence for all companies where public interest is involved, above a threshold level,” said Kumar.

The ICAI plans to consult stakeholders, including the corporate affairs ministry, RBI, the Securities and Exchange Board of India and the Comptroller and Auditor General of India, during the course of its deliberations.

The draft standards will be released for public comments, after which they will be released by the ICAI.

Once released, the standards will be mandatory with prospective effect for ICAI members working on forensic and investigative engagements, and failure to comply will result in disciplinary action, said Gupta.