A Look at 2025, ETCFO
Calendar year 2025 saw a series of regulatory, standard-setting and operational developments across accounting and auditing. Audit regulators, accounting standard-setters and professional bodies advanced revised audit standards, updated accounting requirements, approved changes to professional conduct rules and expanded audit oversight activities, while technology adoption continued to grow across audit and finance functions.
The developments during the year covered statutory auditing standards, Indian Accounting Standards, international accounting standards, ethics for professionals, and broader audit quality initiatives.
Audit standards: NFRA places revised auditing standards for government notification
The National Financial Reporting Authority (NFRA) placed a comprehensive set of revised Standards on Auditing and Quality Management Standards before the Ministry of Corporate Affairs (MCA) for notification under the Companies Act, 2013.
The standards align with international auditing norms and cover audit planning, risk assessment, audit evidence, group audits, use of experts, documentation, and firm-level quality management. NFRA stated inspection findings showed persistent gaps in audit quality and documentation, prompting the revisions. As of late 2025, the revised auditing standards were under government consideration and had not yet come into force.
NFRA also circulated a sample Audit Strategy Memorandum for auditors to strengthen audit planning and risk assessment and distributed audit toolkits to small and mid-sized firms to support improved audit quality.
Accounting standards: Ind AS amendments notified; new standard under consultation
The Ministry of Corporate Affairs (MCA) notified amendments to several Indian Accounting Standards (Ind AS) in 2025, based on recommendations by the Accounting Standards Board of the Institute of Chartered Accountants of India (ICAI). These amendments included technical clarifications and updates relating to classification, measurement, and disclosure requirements under existing Ind AS.
ICAI’s ASB issued an Exposure Draft of Ind AS 118, Presentation and Disclosure in Financial Statements, proposing a revised framework to replace Ind AS 1. The exposure draft was released in January 2025 for public comment, with a proposed effective date for annual reporting periods beginning on or after April 1, 2027, once notified by MCA. Ind AS 118 aligns Indian reporting with IFRS 18, Presentation and Disclosure in Financial Statements, issued by the International Accounting Standards Board in April 2024, but remained at the exposure draft stage in 2025.
International accounting standards: IFRS for SMEs third edition released
The IFRS Foundation and IASB issued the third edition of the IFRS for Small and Medium-sized Entities (SMEs) Accounting Standard in February 2025. The updated standard includes revised sections on concepts and pervasive principles, financial instruments, fair value measurement, revenue recognition, and business combinations, along with implementation support resources. It has a future effective date and was not mandatory in 2025.
Ethics and professional conduct: ICAI approves updated Code of Ethics
The ICAI Council approved a revised Code of Ethics in 2025, strengthening auditor independence provisions, updating rules on fee dependency, and clarifying obligations for non-audit and emerging assurance engagements. The revised Code, modernising provisions on professional visibility and networking, is scheduled to come into effect from April 1, 2026.
Audit technology: broader adoption of automation and analytics
Audit firms and corporate finance functions expanded the use of data analytics and artificial intelligence (AI) tools during 2025 for transaction analysis, journal entry testing, risk assessment, contract review, and audit documentation. Regulators emphasised that automation must be accompanied by proper controls, governance, and professional judgement.
Audit oversight: continued focus on quality deficiencies
NFRA continued to report quality concerns in inspections, particularly in impairment assessment under Ind AS 36, valuation methods, group audit procedures, and reliance on management estimates. International regulators also noted challenges as audits became more complex due to global operations, technology use, and evolving reporting requirements.
Audit market: no structural changes implemented, PMO panel set up to explore home‑grown firms
Audit market concentration remained largely unchanged in 2025, with the Big Four accounting firms continuing to dominate audits of large listed companies and multinational entities. No policy measures affecting audit market structure were implemented during the year. However, the Prime Minister’s Office convened a committee to review regulatory reforms aimed at enabling large domestic audit and consulting firms to scale up and compete with global players, examining measures such as multidisciplinary licensing and access to public contracts. This panel is an initial step toward strengthening home‑grown audit capacity.
