--- title: "Edition No. 1 | 13 June 2026 | BNPS and Associates LLP" url: "https://bnpsca.com/insight/edition-no-1-13-june-2026" description: "KEY HIGHLIGHTS: • NFRA circular: auditor–governance communication failures now classified as audit quality failures. • MCA amends AS 22 for Pillar Two — new..." --- # Edition No. 1 \| 13 June 2026 Written by: **[CA Chintan Patel](https://bnpsca.com/partner/ca-chintan-patel)** \| Topic: **Board Members** ![Edition No. 1 | 13 June 2026](https://imageproxy.inlancer.in/pr:sharp/f:webp/rs:fit:1200:0/g:sm/plain/https://bnpsca.com/public/assets/upload/images/original/6a7aa5f36c663-Images-1.jpeg)13-06-2026 KEY HIGHLIGHTS: • NFRA circular: auditor–governance communication failures now classified as audit quality failures. • MCA amends AS 22 for Pillar Two — new disclosures mandatory for large MNEs from FY 2025-26. • ICAI 2026 Bank Audit Guidance Note updated for digital lending, KYC and cybersecurity risks. [ Download File ](https://bnpsca.com/public/assets/upload/images/original/6a7aa1aa3acfc-Boardroom-Intelligen.docx) | **B N P S AND ASSOCIATES LLP** \| Chartered Accountants | |---| | \| **BOARDROOM INTELLIGENCE** *Essential Insights on Financial Reporting, Audit, Governance, Regulation & AI* \| **13 June 2026** Vol. I \| Sample Edition \| | |---| | | **Chintan's Perspective** | |---|---| | ![Chintan N. Patel - Partner, B N P S And Associates LLP](https://bnpsca.com/public/assets/upload/images/original/6872083e8d605-11.png) **Chintan N. Patel** Partner – Financial Reporting & Advisory *B N P S And Associates LLP* | The NFRA's January 2026 circular on auditor communication marks a meaningful shift in how audit quality is assessed in India. NFRA's inspection observations reveal that communication failures between auditors and those charged with governance are not procedural lapses — they are audit quality failures. When auditors fail to correctly identify the governance structure, or document their communications inadequately, the audit loses its principal value: providing independent insight to those responsible for financial oversight. Boards and audit committees should treat this circular as an opportunity to reassess the quality — not just the frequency — of their interactions with statutory auditors. SA 260 and SA 265 have always set the standard. What is now clear is that NFRA intends to enforce it. | |---|---| | | **Top Developments** | |---|---| | **01** | **NFRA Issues Circular on Auditor–Governance Communication** ***WHY IT MATTERS*** *Communication failures between statutory auditors and audit committees identified as a systemic audit quality concern.* The National Financial Reporting Authority issued a circular on 7 January 2026 requiring statutory auditors of listed and specified companies to strengthen communication with those charged with governance. The circular mandates at least two formal meetings per audit cycle — before commencement and before financial statement approval. Lapses cited include incorrect identification of governance structures, inadequate documentation, and failure to address related party risks. **PRACTICAL IMPLICATION** Auditors should review communication frameworks against SA 260 and SA 265. Audit committees should assess whether their engagement with statutory auditors meets the standard envisaged by this circular. **READ MORE** [View Source →](https://nfra.gov.in/nfra-circular-on-effective-communication-between-statutory-auditors-and-those-charged-with-governance-including-audit-committees/) | |---|---| | **02** | **MCA Amends AS 22 to Align with OECD Pillar Two Model Rules** ***WHY IT MATTERS*** *Entities within large multinational groups must follow revised accounting treatment for deferred tax under the global minimum tax regime.* The Ministry of Corporate Affairs, vide Notification No. G.S.R. 169(E) dated 10 March 2026, amended Accounting Standard 22 on Accounting for Taxes on Income. The amendment prohibits recognition or disclosure of deferred tax arising from Pillar Two legislation, including qualified domestic minimum top-up taxes. Paragraph 32A to 32D disclosure requirements apply to multinational enterprises from FY 2025-26, with partial relief for small and medium-sized companies. **PRACTICAL IMPLICATION** Finance teams of large multinational groups with Indian operations should review deferred tax positions. Paragraphs 32A–32D disclosures are substantive — not a filing formality. **READ MORE** [View Source →](https://www.business-standard.com/economy/news/mca-aligns-accounting-standards-with-oecd-pillar-two-1260318012091.html) | |---|---| | **03** | **ICAI Releases Guidance Note on Audit of Banks – 2026 Edition** ***WHY IT MATTERS*** *Updated guidance aligns bank audit practice with recent RBI master directions and addresses digital lending and cybersecurity risks.* The Auditing and Assurance Standards Board of ICAI released the 2026 edition of its Guidance Note on Audit of Banks, incorporating RBI directions up to 28 February 2026. Key revisions address KYC compliance, deposit classification, digital lending risks, and securitisation norms. The guidance also provides updated direction on treasury audits, cybersecurity, and data integrity concerns arising from digital banking platforms. **PRACTICAL IMPLICATION** Statutory central and branch auditors should update audit programmes before commencing fieldwork, with particular attention to the revised digital lending and deposit classification guidance. **READ MORE** [View Source →](https://www.icai.org/post/guidance-note-on-audit-of-banks-2026-edition) | |---|---| | **04** | **IFRS 7 and IFRS 9 Amendments Effective for 2026 Reporting Periods** ***WHY IT MATTERS*** *Companies under full IFRS must apply amendments affecting derecognition, ESG-linked instruments, and power purchase agreements.* Amendments to IFRS 7 and IFRS 9 are effective for annual periods beginning on or after 1 January 2026. Key changes clarify settlement-date derecognition, introduce an exception for electronic payment systems, revise guidance on ESG-linked cash flow features, and update disclosure requirements. Separate provisions apply to power purchase agreements. The IASB also commenced a project to clarify the fair value option under IAS 28. **PRACTICAL IMPLICATION** Finance teams reporting under full IFRS should assess the impact on financial instrument portfolios — particularly entities with ESG-linked facilities, green bonds, or power purchase agreements. **READ MORE** [View Source →](https://kpmg.com/us/en/articles/2026/q2-2026-new-ifrs-accounting-standards-amendments-are-you-ready.html) | |---|---| | | **This Matters More Than It Appears** | |---|---| | The AS 22 amendment on Pillar Two tax may appear to offer narrow accounting relief. The more consequential development is the accompanying disclosure framework. Paragraphs 32A to 32D require multinational enterprises to disclose Pillar Two legislation in their operating jurisdictions, their tax exposure, and the anticipated effect on effective tax rates. These disclosures will attract scrutiny from statutory auditors, institutional investors, and revenue authorities. Finance teams that treat these paragraphs as a filing formality — rather than a substantive exercise requiring robust cross-jurisdictional data — do so at their own risk. | |---| | | **AI Watch** | |---|---| | COSO published “Achieving Effective Internal Control Over Generative AI” on 23 February 2026, providing a practical, ICIF-aligned framework for managing AI risks. The guidance covers all five ICIF components and includes audit-ready control mapping and minimum control expectations. Finance and audit functions deploying AI tools for journal entry review, financial close, or contract analysis should benchmark their control environment against this framework. **Source: COSO** [View Publication →](https://www.coso.org/generative-ai) | |---| | | **Quote of the Day** | |---|---| | *“The strength of an institution lies not in what it conceals, but in what it willingly discloses.”* — Lord Mervyn King, Former Governor, Bank of England | |---| | | **About BNPS** | |---|---| B N P S And Associates LLP is a firm of Chartered Accountants having offices at Ahmedabad, Bengaluru, Raichur, Rajkot. The firm provides professional services in the areas of audit, assurance, financial reporting, taxation, risk advisory, due diligence and related professional services. For details refer, [www.bnpsca.com](https://www.bnpsca.com). **Disclaimer:** This publication is intended solely for informational purposes and should not be construed as professional advice. Readers should seek professional guidance before acting on any information contained herein. - Tags: - [Audit Committee](#) - [Board](#) - [NFRA](#) - [Ind AS](#) - [Governance](#) - [Risk](#) ![CA Chintan Patel](https://imageproxy.inlancer.in/pr:sharp/f:webp/rs:fit:200:0/g:sm/plain/https://bnpsca.com/public/assets/upload/images/original/6872083e8d605-11.png)About the Author #### CA Chintan Patel Ahmedabad Ind AS Advisory Statutory Audit of Listed Companies ESG,BRSR [View Profile ](https://bnpsca.com/partner/ca-chintan-patel) #### Share this on social media : [ Share ](http://www.facebook.com/sharer.php?u=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ Tweet ](https://twitter.com/intent/tweet?url=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ Post ](https://vk.com/share.php?url=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ post ](https://www.linkedin.com/shareArticle?mini=true&url=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ Share ](https://api.whatsapp.com/send?text=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ post ](https://reddit.com/submit?url=https://bnpsca.com/insight/edition-no-1-13-june-2026) [ pin ](https://pinterest.com/pin/create/button/?url=https://bnpsca.com/insight/edition-no-1-13-june-2026) ## You May Also Like Similar Articles You Might Find Interesting [ ![Edition No. 2 | 14 June 2026](https://imageproxy.inlancer.in/pr:sharp/f:webp/rs:fit:500:0/g:sm/plain/https://bnpsca.com/public/assets/upload/images/original/6a7aa73b97dab-Images-2.jpeg) ](https://bnpsca.com/insight/edition-no-2-14-june-2026 "Blog Link")14-06-2026 #### [Edition No. 2 \| 14 June 2026](https://bnpsca.com/insight/edition-no-2-14-june-2026 "Edition No. 2 | 14 June 2026") By Chintan N. 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