The Securities and Exchange Board of India (SEBI) on February 03, 2025, issued a Consultation Paper on a draft circular for Management Statement and Auditor's/Independent Practitioner's Report on digital assurance based on information obtained from external data repositories.
The Auditing and Assurance Standards Board (AASB) and the Digital Accounting and Assurance Board (DAAB) of The Institute of Chartered Accountants of India (ICAI) have released a "Technical Guide on Digital Assurance." This guide aims to help auditors enhance their use of technology in audits, particularly through the use of digitally available external audit evidence and information. It provides guidance on how auditors can incorporate such digital data into their audit procedures.
The guide focuses on utilising external sources of audit evidence and does not mandate separate reporting by auditors on these aspects. Additionally, it does not require the management of listed entities to provide access to these external data repositories for auditors.
As a continuous endeavour to enhance the quality of financial reporting being done by listed companies and to provide greater investor protection, it is proposed to mandate a separate report on digital assurance of financial statements. The report will increase transparency, improve disclosure standards enable better enforcement, and provide greater investor protection and trust in the ecosystem.
Based on ICAI feedback, the cost of this report may not be high as a proportion of total audit fees, incurred by the company.
A draft Circular on this subject along with the format of reporting is paced in Annexure A.
Public comments are sought on draft circular on “Management Statement and Auditor’s/Independent Practitioner’s Report on digital assurance based on information obtained from external data repositories.” placed at Annexure A.
The comments/ suggestions should be submitted latest by February 24, 2025, through the following link: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComm
