Module: | Statutory Audit, NFRA & ICAI Standards
Q47: Consider the following statements regarding the Information Systems Audit Standards (ISAS) introduced by the ICAI in February 2026:
1. The ICAI is the first professional accounting institute in India to issue a comprehensive set of native Information Systems Audit Standards.
2. The framework consists of exactly 11 distinct standards designed to strengthen the audit procedures within digital and automated ecosystems.
3. The ISAS framework completely replaces the existing Standards on Auditing (SAs) for any company that generates more than 50 percent of its revenue through e-commerce.
Which of the above statements is/are incorrect?
2. The framework consists of exactly 11 distinct standards designed to strengthen the audit procedures within digital and automated ecosystems.
3. The ISAS framework completely replaces the existing Standards on Auditing (SAs) for any company that generates more than 50 percent of its revenue through e-commerce.
Which of the above statements is/are incorrect?
✅ Correct Answer: C
🎯 Quick Answer:
C. Only 3 is incorrect.Structural Breakdown: Statement 1 is correct; the ICAI president confirmed it is a pioneering move by the professional body.
Statement 2 is correct; the central council approved exactly 11 specific ISAS standards.
Statement 3 is incorrect; ISAS does not replace traditional Standards on Auditing (SAs). It works in tandem with them, providing specialized IT-focused guidance, regardless of whether a company is an e-commerce platform or a traditional manufacturer using an ERP.
Historical/Related Context: As accounting shifted entirely from paper ledgers to complex cloud-based ERPs and blockchain structures, the ICAI recognized that traditional substantive testing was insufficient.
Auditors needed specialized standards to audit the underlying code and access controls.
Causal Reasoning: You cannot rely on a financial output if the system generating it is compromised.
ISAS ensures that auditors rigorously verify the "black box" of IT systems, preventing massive, automated financial frauds that traditional sampling would miss.