ICAI widens AQMM v2.0 scope, mandates public disclosure

Background: Introduction of AQMM

The Institute of Chartered Accountants of India (ICAI) introduced the Audit Quality Maturity Model (AQMM) to strengthen audit quality across the profession. The model serves as a comprehensive framework to assess the maturity level of an audit firm’s quality control systems and processes. Initially, AQMM Version 1.0, which came into effect from April 1, 2023, was applicable only to a select set of firms. These included those engaged in the statutory audit of listed entities, certain categories of banks, and insurance companies. Notably, firms acting solely as branch auditors were excluded from its mandatory application in this phase.

Expansion under AQMM Version 2.0

On August 11, 2025, ICAI announced an expansion of the AQMM framework through Version 2.0, significantly broadening its scope. Under this updated framework, more categories of audit firms will now be brought within the AQMM’s ambit in a phased manner. This expansion is aimed at ensuring that a wider spectrum of firms align with best practices in audit quality and undergo systematic evaluation to improve their processes.

Inclusion of Additional Firm Categories

The revised framework will now also cover firms meeting specific criteria such as auditing significant unlisted public companies or entities that manage large amounts of public funds. By bringing these firms under AQMM, ICAI intends to ensure that entities with substantial public interest are audited by firms adhering to high-quality standards. The phased approach is designed to allow firms sufficient time to adopt the necessary systems and controls to comply with AQMM requirements.

Enhanced Transparency and Public Disclosure

Under AQMM Version 2.0, the maturity level of each firm will not only be assessed but also publicly disclosed. These levels will be published on the ICAI website and mentioned on Peer Review Certificates issued to the firms. This measure is expected to enhance transparency in the audit profession and enable stakeholders—such as regulators, companies, and the public—to make informed decisions regarding audit engagements. It also serves as an incentive for firms to continually improve their audit quality practices.

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