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Forensic Accounting and Investigation Standards (FAIS) under DAAB

Navdisha Sehgal

| Updated: Apr 05, 2021 | Category: Finance Business, Internal Audit

Forensic Accounting and Investigation Standards (FAIS) under DAAB

DAAB (Digital Accounting and Assurance Board) constituted by ICAI to find a solution of all the issues arising regarding the valuation and internal audit in the digital world. So, the board came up with a proposal to issue some standard rules to codify the practices in the domain of forensics and investigation. The standard rules proposed are named as Forensic Accounting and Investigation Standard (FAIS).

In this article we will study all about Forensic Accounting and Investigation Standard (FAIS).

What are ICAI and DAAB & the role they play in Forensic Accounting and Investigation Standard (FAIS)?

ICAI stands for Institute of Chartered Accountants of India. It is a statutory body set up under the Chartered Accountants Act, 1949[1] to regulate and monitor the CAs (Chartered Accountants) in India.

ICAI has always actively supported the government towards the better governance. ICAI constituted DAAB (Digital Accounting and Assurance Board) that promotes the policy of digital accounting and assurance. DAAB highlights the issues in accounting and assurance in the digital world. The issues included are valuation and internal audit.

DAAB issues a set of Forensic Accounting and Investigation Standard (FAIS) in the country to resolve the issues related to accounting and assurance in digital world.

The ICAI also realised that there is a need to standardize the rules, which will be helpful for the law enforcement agencies, banks, corporate, and other stakeholders to understand the common and standard practices for conducting forensic accounting and investigation standard.

Finally DAAB issued exposure drafts of Forensic Accounting and Investigation Standard (FAIS) and invited comments of public to finalise this.

Why proposal for Forensic Accounting and Investigation Standard (FAIS) was needed?

With the rise in accounting, financial and loan variations, there was a need of Forensic Accounting and Investigation Standard in India to conduct their assignments in effective, qualitative and prudent ways. This will also help in collecting evidences which may be on scrutiny in a court of law.

The benefits of Forensic Accounting and Investigation Standard are:

  • Standardization process across the country.
  • Collection of evidences which may be on high level scrutiny in a court of law.
  • It will be used in all the assignments relating to Forensic Accounting and Investigation.
  • This will be helpful to the public interest entities as well.

The ICAI accepted the proposal of DAAB to develop and issue set of Forensic Accounting and Investigation Standards (FAIS) in India. This will result in standardizing the process across India.

The President of ICAI, CA Atul Kumar Gupta said that the Forensic Accounting and Investigation Standards (FAIS) is the result of ICAI in order to overcome the issues of accounting and assurance in the digital world. He also said that FAIS are being prepared and drafted by ICAI and will be helpful in the Forensic Accounting and Investigation profession.

What are the objective & scope of set of Forensic Accounting and Investigation Standard?

The proposed objectives of set of Forensic Accounting and Investigation Standards (FAIS) are:

  • To codify the practices in the domain of forensics and investigations and set standard rules in conducting the assignments in the said areas. ICAI is the sole regulator and monitor in such areas.
  • The scope of Forensic Accounting and Investigation Standards is proposed to be principle based and will specify certain mandatory requirements to be fulfilled by the members who undertake such assignments.

Proposed content of Forensic Accounting and Investigation Standards (FAIS)

DAAB has issued a set of FAIS (Forensic Accounting and Investigation Standards).  

Comments have been invited on the following drafts of FAIS (Forensic Accounting and Investigation Standards) by ICAI. The drafts are:

Proposed content of Forensic Accounting and Investigation Standards (FAIS)

FAIS
No.

 

TITLE

BASIC SCOPE

INTRODUCTION TO THE FAI STANDARDS

1

Preface to FAIS

Introduction, Overview and Process

2

Framework Governing FAIS

The FAIS Structure, components, elements

3

Basic Principles of FAI Services

Attribute and Performance Principles

100

STANDARDS ON KEY CONCEPTS (100 SERIES)

200

STANDARDS ON PRACTICE MANAGEMENT (200 SERIES)

300

STANDARDS ON THE EXECUTING ASSIGNMENTS (300 – 400 SERIES)

500

STANDARDS ON SPECIALISED AREAS (500 SERIES)

600

STANDARDS ON QUALITY CONTROL (700 SERIES)

700

DEFINITIONS AND TERMS

Each standard will have a 6- Para template. This is as follows:

  • Introduction
  • Objectives
  • Requirements
  • Explanation of requirements
  • Documentation
  • Effective date

Conclusion

There was no standard procedure for forensic accounting and investigation and thus results in issues related to accounting and assurance in the digital world.

Thus, the ICAI accepted the proposal of DAAB to develop and issue set of Forensic Accounting and Investigation Standards (FAIS) in India. This will result in standardizing the process across India.

Read our article:A Brief on Forensic Accounting and Investigation Standards

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Navdisha Sehgal

Completed BA LLB from JEMTEC, School of Law, Greater Noida (Affiliated to GGSIP University, New Delhi). I have an experience of about 2 years in various fields of corporate laws, but I have a keen interest in researching on legal issues and to gain knowledge. I always strive to bring the best to work on what I do.

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