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

India is set to be the first country to release a set of forensic accounting and investigation standards (FAIS), according to the Institute of Chartered Accountants of India (ICAI).

The ICAI has constituted a committee to deliberate on the FAIS, which is expected to come out by the end of this year, said Atul Kumar, president of the chartered accountants body, during a virtual press conference on Tuesday.

“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,” said an ICAI statement.

The decision to undertake this activity was brought on by the lack of standardisation of forensic reporting and investigation leading to considerable differences in such reports.

The FAIS will include 30 standards covering all aspects on the subject.

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

While the RBI has mandated a forensic audit for transactions over Rs 200 crore, 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,” Kumar said.

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 among others during the course of its deliberations.

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

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, Kumar said.