The Ministry of Corporate Affairs (MCA) has officially launched the Audit Quality Review Board (AQRB) to strengthen audit oversight and improve the integrity of financial reporting among public limited companies in India. This initiative is part of a broader strategy to enhance investor confidence and promote transparency in corporate governance, especially in the wake of several high-profile audit failures and financial irregularities. The AQRB will function under the purview of the National Financial Reporting Authority (NFRA), with an independent panel comprising senior auditors, retired regulators, legal experts, and industry representatives.

The newly constituted AQRB is tasked with reviewing statutory audit reports, verifying auditor independence, and evaluating adherence to auditing standards issued by the Institute of Chartered Accountants of India (ICAI). Public limited companies listed on Indian stock exchanges will be prioritized in the initial phase, particularly those in high-risk sectors such as finance, infrastructure, and pharmaceuticals. The board will also examine the rotation of auditors, disclosure of key audit matters (KAMs), and instances of modified or qualified audit opinions. Findings from the AQRB will be published in annual reports highlighting audit quality trends, best practices, and areas of concern.

To support the AQRB’s functioning, the MCA has introduced mandatory cooperation guidelines requiring listed entities and their auditors to submit documentation and respond to queries within defined timelines. Non-compliance may attract regulatory scrutiny, penalties, or referral to disciplinary committees under the Companies Act, 2013. The creation of the AQRB is being seen as a landmark step in raising audit accountability and restoring public trust in the financial ecosystem. The first set of reviews is expected to commence in Q3 of FY 2025–26, with a focus on companies reporting material discrepancies or undergoing restructuring.