it depends on structured, two-way communication between statutory auditors and Those Charged With Governance (TCWG). It reinforces existing requirements under the Companies Act, 2013 and Standards on Auditing, especially SA 260 (Revised) and SA 265, rather than creating a new law.
In summary, the Circular emphasizes the following key points:
– The Board of Directors is generally regarded as TCWG, and the Audit Committee may also form part of TCWG depending on the governance structure.
– Communication between auditors and TCWG must be regular, meaningful, documented, and two-way in nature.
– Matters such as audit scope, timing, materiality, significant risks, internal control deficiencies, unusual transactions, related party issues, and auditor independence should be discussed and recorded.
– Companies are expected to have a documented communication framework, including nodal persons, meeting frequency, agenda items, and escalation procedures.
– The Circular applies immediately from 7 January 2026 for entities covered under NFRA jurisdiction, including applicable subsidiaries and associates where relevant thresholds are met.
The practical compliance takeaway is that companies should now ensure clear identification of TCWG, proper documentation of communications, timely meetings with auditors, and robust minute-keeping for Board and Audit Committee interactions.