In a landmark move set to reshape audit practices across India, the ICAI has approved a proposal to limit tax audits to 60 per partner annually, starting from FY 2027. This forward-looking reform is designed to foster transparency, ensure fair distribution of work among partners, and curb the long-standing practice of proxy signings. As firms prepare for the transition, the spotlight is firmly on audit accountability and professional ethics.
Table of Contents
- What Changes Will Occur Under the New Framework?
- Statement from ICAI President
- Implications for Audit Firms
- Expert Reactions – Progressive Yet Practical
- Comparative Snapshot – Before and After
- What’s Next?
- Conclusion
The Institute of Chartered Accountants of India (ICAI) has approved a significant proposal to cap the number of tax audits at 60 per partner per financial year, signalling a significant shift in how audit responsibilities are assigned and executed in India. Though the formal notification is awaited, the Council of ICAI has given its nod to a move that aims to enhance audit quality, promote equitable workload distribution, and bring greater transparency to audit signings.
This change will take effect from FY 2027, allowing firms a transitional period to rework their internal structures and reporting mechanisms.
1. What Changes Will Occur Under the New Framework?
Under the current framework, Section 44AB of the Income Tax Act, 1961 limits the number of tax audits a Chartered Accountant can sign to 60. However, this is interpreted as an individual cap rather than a firm-level restriction. In practice, this has enabled larger firms to pool audit assignments across partners. For example, a firm with five partners could sign up to 300 audits (5 x 60), and technically, a single senior partner could sign all 300 using the quotas of junior partners or dormant ones.
This practice is now under scrutiny.
Under the proposed guidelines, the 60-audit ceiling will be enforced per partner, in the aggregate, across all audits conducted in their capacity or as a partner of any firm(s). Most notably, proxy signings, where one partner signs an audit report on behalf of another, will be explicitly prohibited.
2. Statement from ICAI President
ICAI President described the reform as a step toward professional integrity and accountability. He stated:
“The limit of 60 would be the aggregate limit (under the new guidelines) in respect of all tax audits signed by a member, both in his capacity and as a partner of an accounting firm.”
He also clarified the ethics behind banning proxy signing:
“Moreover, a partner of a firm won’t be able to sign any tax audit report on behalf of any other partner.”
According to the ICAI President, the objective is to discourage the concentration of audit assignments with a few senior individuals, and to curb anti-competitive conduct that arises when a handful of partners control audit volume beyond reasonable professional limits.
3. Implications for Audit Firms
The move is expected to have far-reaching consequences for audit firms, particularly mid-sized and large ones. Internal tracking mechanisms, partner responsibility matrices, and quality review processes will need rethinking. Firms that relied heavily on having senior partners sign all reports while other partners remained passive will have to restructure their approach.
4. Expert Reactions – Progressive Yet Practical
The accounting profession has largely welcomed the reform, seeing it as a way to improve audit quality and partner accountability. Several CA firm partners have expressed their views regarding the development such as follows:
“The ICAI’s move is a progressive reform aimed at decentralising audit concentration and ensuring more equitable workload distribution among partners”.
“Now, the limit applies to individual partners—each partner can sign only up to 60 tax audits. That means if a firm has five partners, all five must actively conduct and sign audits. It’s no longer possible for one partner to shoulder the load for the entire firm.”
“The new rule will bring more objectivity, accountability and enhanced ownership on the partner attesting the tax audits, by the very design of the guidance. This also addresses the risk of front-loading of work, which can lead to more to be done in less time, leading to error-prone output.”
These views reflect a consensus that the reform is not just regulatory but cultural, redefining how partners engage with their audits and their responsibilities.
5. Comparative Snapshot – Before and After
| Aspect | Current Framework | Proposed Framework (Effective FY27) |
| Audit Limit per partner | 60 audits per CA; firm-level pooling allowed | 60 audits aggregate per partner (individual + firm roles) |
| Firm-Level Flexibility | One partner may sign any number of audits using others’ quotas | Strictly capped at 60 per partner |
| Proxy Signing | Allowed | Prohibited |
| Responsibility Allocation | Often centralised in a few hands | Decentralised; direct signing responsibility enforced |
6. What’s Next?
While the ICAI has approved the proposal, the notification and operational guidelines are expected to be issued soon. The institute is likely to provide detailed directions for implementation, including tracking mechanisms, compliance declarations, and penalties for non-compliance.
Firms are advised to start early capacity planning and to reorient their internal structures to align with the coming changes. For many, this may involve training junior partners, reassigning clients, and adopting audit management tools for real-time monitoring of partner assignments.
7. Conclusion
ICAI’s proposed audit cap is more than a numerical adjustment; it is a systemic correction aimed at fostering ethics, independence, and professional diligence in audit practice. As India’s financial reporting ecosystem matures, such measures are critical to ensuring the credibility of audit opinions and the health of the regulatory environment.
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