The National Financial Reporting Authority (NFRA) has extended its public consultation to decide on relaxing the statutory audit obligation of small companies till end of November, showed an official order. The earlier due date for receiving comments and suggestions was 10 November.

The audit regulator had in September made public a consultation paper on ‘statutory audit and auditing standards for micro, small and medium companies (MSMCs)’ giving facts about how small companies are currently getting their audit done.

NFRA’s preliminary analysis found that the fees paid to auditors by a large majority of micro, small and medium companies are way below what an audit, when performed in compliance with the letter and spirit of the standards of auditing, would require.

Major economies of the world require statutory audit for small companies only in case some minimum criteria of public interest are satisfied, the audit regulator had then said. Even in India, income tax audit is now not compulsory where the turnover is ₹10 crore or less provided not more than 5% of the transactions are in cash. GST audit has also been completely done away with.

NFRA said it was appropriate to revisit the requirement of compulsory statutory audit for all companies irrespective of their size and/or public interest.

According to NFRA, India is unique among the big economies of the world in statutorily mandating compulsory audit for all companies, irrespective of their size and characteristics.

“In view of the significant role played by companies in India in the economic growth and development of the nation, it is essential that the regulatory environment is conducive to support, and not burden, the growth in business and economic activities of these entities," the regulator said while seeking comments.