The Institute of Chartered Accountants of India (ICAI), vide its announcement dated 14th October 2024, had issued two new Standards on Quality Management, SQM 1,”Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements”; and SQM 2, “Engagement Quality Reviews”.
These standards were introduced to strengthen the quality management framework for audit and assurance firms by focusing on a more proactive and risk-based approach. They were scheduled to become mandatorily effective from April 1, 2026, and were to replace the existing Standard on Quality Control (SQC 1).
However, the ICAI Council, at its 451st meeting held on 30th–31st March 2026, reviewed the implementation timeline of these standards. After considering the readiness of firms and the transition efforts required, the Council has decided to defer the mandatory applicability of SQM 1 and SQM 2 until further announcement.
As a result, there is no immediate change in the current framework. The existing SQC 1 will continue to remain in force, and firms should keep following the present quality control requirements.
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