On 7 January 2026, the National Financial Reporting Authority (NFRA) published a circular in relation to Effective Communication between Statutory Auditors and Those Charged With Governance (TCWG), including Audit Committees (the Circular). The Circular emphasises the importance of transparent, timely, and well‑structured communication throughout the audit cycle to strengthen governance oversight and enhance audit quality.
NFRA has also highlighted certain recurring gaps in the existing practices of communication between statutory auditors and TCWG including Audit Committees. Common issues noted by NFRA include incorrect evaluation of company’s governance structure resulting in incorrect identification of TCWG, gaps in design and documentation of communication processes, lack of timely communication, and failure to discuss significant audit findings related to transactions outside the normal course of business, deficiencies in internal controls and risks associated with related party transactions.
To strengthen these practices, the Circular reiterates and clarifies the statutory and professional obligations under the Companies Act, 2013 (the 2013 Act), relevant Rules, and Standards on Auditing (SAs), particularly SA 260 (Revised), Communication with Those Charged with Governance and SA 265, Communicating Deficiencies in Internal Control to Those Charged With Governance and Management. These Standards require auditors to identify TCWG at the outset, maintain continuous two‑way communication, and provide timely written reporting of significant deficiencies in internal controls.
This issue of First Notes summaries NFRA’s expectations and responsibilities for TCWG and auditors. It also summarises the recommendations of NFRA aimed at promoting a structured, transparent, documented and timely exchanges between auditors and governance bodies to elevate audit quality and enhance the overall governance framework within companies.
