The National Financial Reporting Authority (NFRA) has scheduled a board meeting on November 25. The gathering will review and potentially establish audit rules for limited liability partnerships (LLPs), according to sources. Representatives from the Institute of Chartered Accountants of India (ICAI) will take part. The representatives had previously submitted a Guidance Note on LLP financial statements.
This meeting comes after NFRA’s recent two-day board discussion on amending Standards on Auditing 600 (SA 600) coinciding with International Standards on Auditing (ISA 600). SA 600 provides standards for auditing group financial statements, and amending it will bring Indian audit practices closer to global standards.
In India, LLPs having turnover below ₹40 lakh or contributions under ₹25 lakh are exempt from obligatory audits, per Rule 24 of the LLP Rules, 2009, unless partners decide otherwise.
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LLPs include elements of corporations and partnerships, but current auditing norms apply mainly to traditional firms, leaving LLP-specific standards undefined.
Experts stress the need for distinct audit norms for LLPs due to their hybrid nature. NFRA, working with ICAI, is set to present these guidelines and propose them to the Ministry of Corporate Affairs (MCA) for formal notification.
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This initiative aligns with broader regulatory efforts to fuel India’s startup ecosystem, especially after the Limited Liability Partnership (Amendment) Bill of August 2021, which reduced penalties to ease business operations.
With LLPs becoming popular for their flexibility and limited liability benefits, tailored auditing standards will improve financial transparency and governance in this sector.
