ICAI to Cap Tax Audits at 60 Per Partner: A Move Toward Fairer Practice
In a bold step aimed at enhancing equity and professional ethics within the accounting community, the Institute of Chartered Accountants of India (ICAI) is set to revise its guidelines on tax audit limits. Starting from the financial year 2026–27 (FY27), each partner of a chartered accountant firm will be individually capped at 60 tax audit assignments per year-a move designed to prevent the overconcentration of audit work in the hands of a few senior partners.
According to ICAI President CA Charanjot Singh Nanda, the new regulation seeks to discourage anti-competitive practices and encourage a more balanced distribution of work among partners within CA firms. Importantly, the quota will be non-transferable, meaning no partner will be allowed to utilize the unused quota of another.
What Changes Now?
Currently, an individual CA is allowed to sign a maximum of 60 tax audits per financial year. However, in the case of a partnership firm, the overall cap is calculated as the sum total of all partners’ individual quotas. This allowed some firms to assign a majority of the audits to a handful of influential or senior partners, while junior partners remained underutilized.
This arrangement, though technically compliant, often led to audit concentration in a few hands and undermined the spirit of equal professional opportunity.
To address this imbalance, ICAI’s latest guideline proposes that the limit of 60 tax audits will now apply individually to each partner, even within a firm. A partner won’t be able to sign reports beyond their personal quota, and no audit can be signed by one partner on behalf of another.
Why the Rule Change?
The primary objective is to prevent the exploitation of junior partners’ unused quota by senior members. “This often results in senior partners at firms using the quota of their junior colleagues after exhausting their own limit,” said ICAI President Nanda.
This has long been an open secret in the profession-where firms with, say, 10 partners (collective limit of 600 audits) had 80-90% of the work being executed and signed by just one or two senior partners.
To put an end to this, ICAI is ensuring that each partner signs no more than 60 audit reports annually, irrespective of how many partners the firm has or how the overall quota is distributed.
Important Clarification: What’s Excluded?
The proposed limit of 60 audits will not include:
- Tax audit assignments arising out of certain legal mandates under the Income Tax Act, and
- Audits under Section 44ADof the Income-tax Act, i.e., audits of businesses covered under presumptive taxation.
This is a crucial exemption because Section 44AD primarily applies to small taxpayers and is not mandatory unless turnover thresholds are breached or profits declared are lower than the presumptive rate. Excluding these audits from the 60-limit ensures that small and medium-sized practitioners are not unduly burdened or penalized for servicing such clients.
Implications for the Profession
This structural reform will have multiple implications:
- Decentralization of Audit Work: No more monopolies within firms. Every partner will now need to handle their fair share.
- Professional Empowerment: Junior and less-experienced partners will gain exposure and responsibilities, enhancing professional development.
- Quality over Quantity: The cap will prompt CAs to focus more on audit quality, documentation, and compliance—rather than chasing numbers.
- Stronger Governance within Firms: Firms will have to streamline internal audit allocations and develop partner-level accountability mechanisms.
What Firms Should Do
- Revisit Audit Allocation Policies: Firms must prepare to allocate assignments more equitably among partners in the next two years.
- Train and Mentor Junior Partners: With each partner accountable for their 60-audit limit, firms must invest in grooming upcoming professionals.
- Review Internal Controls: Ensure compliance with signing protocols and prevent any misuse of partner names.
In Conclusion
This long-awaited reform by ICAI strikes a fine balance between maintaining professional standards and promoting equitable opportunities. It closes a loophole that allowed a few to dominate, while also shielding the profession from future regulatory criticism around fairness and workload ethics.
While firms may initially face internal realignments, the outcome will be a healthier, more transparent, and professionally rewarding environment for all chartered accountants.
Let’s be honest-60 audits per partner is more than enough when done with due diligence and integrity. After all, it’s not about how many audits you sign, but how sincerely you sign them.
However, a caveat. The new trend is capacity and brand building wherein each partner take care of particular sector like Incime Tax, GST, RERA, Project Fimance, FEMA, etc. The capacity and brand building to some extent might be affected as each souls be required to have fixed time constrait for tax audit now.
