ICAI News – The Institute of Chartered Accountants of India has issued a significant notification regarding the deferment of effective date of SQM 1 & SQM 2.
ICAI Announcement on SQM 1 and SQM 2
As per the latest ICAI announcement, the implementation of Standards on Quality Management (SQM 1 & SQM 2) has been deferred. It must be noted that SQM 1 & SQM 2 were initially supposed to come into effect from 1st April, 2026; however, their effective date has been deferred indefinitely.
Therefore, CA firms are not required to implement the new standards immediately.
What Will Apply Until Now?
Till ICAI announces a new date:
- Current Standard on Quality Control (SQC 1) shall continue to apply.
- Audit firms may follow current audit quality frameworks without implementing SQM standards.
What are SQM 1 & SQM 2?
For the sake of clarity:
- SQM 1 is related to quality control for audits.
- SQM 2 covers engagement quality review.
These standards aim at improving audit quality in a more structured manner.
Why Has ICAI Deferred Implementation of SQM 1 and SQM 2?
This has been decided during the 451st ICAI Council Meeting held between 30–31 March 2026. Although ICAI has not announced a new date for these standards, the deferment allows enough time to the firms to get prepared.
Impact of the SQM Deferment
The deferment of SQM 1 and SQM 2 is significant from the following perspectives:
- CA Firms – Get some additional time to develop systems and processes
- Practicing CAs – No pressure of immediate implementation
- CA Students – Current questions may be based on SQC 1 only
- Audit Industry – Smooth implementation of the standards
Although SQM 1 and SQM 2 are going to be the future of audit quality in India, their implementation has been deferred indefinitely. Professionals are advised to keep track of any updates by ICAI with respect to new effective date of SQM 1 and SQM 2.
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