ICAI defers the effective date of Standard on Quality Management SQM1 and SQM2

ICAI defers the mandatory effective date of SQM 1 and SQM 2

The Council of ICAI, at its 451st Meeting held on 30th and 31st March 2026 considered the matter relating to the mandatory effective date of SQM 1 and SQM 2. The Council decided to defer the mandatory effective date of SQM 1 and SQM 2 until further announcement.

Until such time as a further announcement is made, the extant SQC 1 shall continue to remain applicable.

Earlier, vide announcement dated 14.10.2024, the Institute of Chartered Accountants of India (ICAI) had issued two new Standard on Quality Management (SQM). These Standards were to become mandatorily effective from 1st April 2026. Upon their coming into effect, SQM 1 and SQM 2 were to replace the extant SQC 1.

The Standard on Quality Management (SQM) 1 deals with a firm’s responsibilities to design, implement and operate a system of quality management for audits or reviews of financial statements, or other assurance or related services engagements. Engagement quality reviews form part of the firm’s system of quality management. The SQM 1 deals with the firm’s responsibility to establish policies or procedures addressing engagements that are required to be subject to engagement quality reviews. The Standard on Quality Management (SQM) 2 deals with the appointment and eligibility of the engagement quality reviewer; and the engagement quality reviewer’s responsibilities relating to the performance and documentation of an engagement quality review. SQM 2 applies to all engagements for which an engagement quality review is required to be performed in accordance with SQM 1. The SQM 2 is premised on the basis that the firm is subject to SQM 1. An engagement quality review performed in accordance with this SQM is a specified response that is designed and implemented by the firm in accordance with SQM 1. The performance of an engagement quality review is undertaken at the engagement level by the engagement quality reviewer on behalf of the firm.

The extant corresponding standard i.e. SQC 1 will continue to be applicable till these standards become applicable. 

The SQM 1 and SQM 2 contain conforming amendments to various other standards which would be applicable from the date of applicability of these standards.

• AO can’t take two different stands on immunity u/s 270AA(2) for a same transaction
• ITAT held 2000 gram jewellery reasonable in view of customary practices & CBDT Instruction
• Documents obtained post search & information obtained from public domain not incriminating material
• No second reopening for unexplained credits in bank due to bank’s name change
• FDCM invites application for empanelment of practising CAs/ Chartered Accountant Firms