Recently The Institute of Chartered Accountants of India (ICAI), through its Digital Accounting and Assurance Board (DAAB), has released an Exposure Draft proposing a comprehensive revision of the Forensic Accounting and Investigation Standards (FAIS) and its Implementation Guide.
The guidelines are expected to be implemented from 1st July,2025, the institute has welcomed public comments and suggestions to the proposed draft from practitioners, firms, academic professionals, regulators and other stakeholders till 19th June,2025.
Proposed changes: the draft proposes a properly structured format regarding the expected standard of service from a forensic accounting professional along with basic principles of forensic accounting and Investigations, furthermore the draft undertakes to explain the standard procedures for different dimensions of forensic accounting such as standards of engagement management, executing assignment, reporting, quality control etc.
Scope and Objectives: The framework covers all types of FAI services except in a situation where performance of forensic work steps as part of assurance assignment is involved, this regulatory clarity distinguish clearly between standalone forensic investigations (to which FAIS Applies) and the forensic procedure within other engagements (FAIS does not apply) thus reducing unnecessary compliance burden during statutory audit and promoting audit efficiency.
The proposed revision aims to align the standards with emerging best practices in forensic accounting and evolving regulatory expectations in the wake of technological changes while improving the overall quality of forensic accounting.
Nature of Guidelines: The ICAI has decided to make the FAIS mandatory in nature which implies that professionals must ensure compliance with the standards and the basic principles failing which the FAI report must disclose the material departure from such standards along with appropriate explanation.
However, the implementation and technical guides which outlines the best practices to apply the above standards to effectively achieve the objectives of FAIS has been made recommendatory, this may cause unnecessary confusion in the minds of professionals and their hiring agencies alike as to whether the said professional can deviate from the prescribed practice or not thus complicating the procedural standards rather than simplifying them.
Conclusion and Suggestions: The revised FAIS guidelines are a double-edged sword for India’s forensic accounting profession. On the one hand, they bring structural clarity, distinguish forensic work from audits, and align with global standards—enhancing credibility and reducing confusion. On the other, the hybrid model of mandatory standards and recommendatory guides creates compliance ambiguity, risking inconsistent practices and liability concerns. Smaller practitioners may face disproportionate burdens due to transition costs, new terminology, and documentation demands. Ultimately, success hinges on practical implementation—through clear guidance, effective training, and a collective commitment to view these changes as growth opportunities rather than compliance hurdles.
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Author: Shivam, a 2nd year student at GNLU, Gandhinagar
