The National Financial Reporting Authority (NFRA) has recommended a host of auditing standards for the limited liability partnerships (LLPs) on Monday that will make them more accountable and increase transparency. The NFRA recommended that a total of 40 standards on auditing (SAs) and related standards on quality management (SQM), which were finalised by the regulator recently for companies, will be applicable to audit of LLPs as well.
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Upon the approval of the government, these standards will be effective from April 2026. An NFRA source told FE that a common standard was required to framed as per the LLP (Amendment) Act 2021. “If there are no standards for LLPs, then everybody has the freedom to follow their own standards,” said the source.
At the moment, there are no legally-mandated accounting and auditing standards for LLPs. Also, the LLPs are exempted from Auditor’s Report Order (CARO), a format for the issue of audit reports in case of statutory audits of companies.
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Experts said that the surge in LLP registrations has prompted NFRA to recommend new standards. LLPs have been mushrooming due to various regulatory advantages such as lower compliance requirements for them. For instance, the number of LLPs that registered in FY24 touched an all-time high of 58,990 which was 63% higher than 36,249 LLPs registered a year earlier.
Last December, the Institute of Chartered Accountants of India (ICAI) has released exposure draft for LLPs to bring them at par with the auditing auditing norms for companies.
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“This will have a wide-ranging impact on enhancing the quality and transparency of financial reporting, ensuring greater compliance with regulatory requirements, improving the reliability of financial statements, and ultimately fostering increased investor confidence and protection of stakeholder interests across the LLP sector,” said Atul Gala, partner at Bhuta Shah &
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