Audit committees: structured auditor dialogue

A lot of audit failures do not start with fake numbers. They start with a room where the auditor, the audit committee, and the board never pinned down who would say what, when, and in writing. (nfra.gov.in) That is why KPMG India put out a 2026 FAQ note on a new Indian regulator circular about “effective communication” between statutory auditors and those charged with governance, which includes audit committees. The note says the regulator wants communication to be timely, two-way, and documented through the full audit cycle, not saved for the last meeting before accounts are signed. (assets.kpmg.com) The regulator behind this is the National Financial Reporting Authority, which issued the circular on January 7, 2026. Its stated objective was to strengthen the quality, timeliness, and documentation of communication between auditors and boards. (nfra.gov.in) “Those charged with governance” sounds abstract, but it usually means the people on the board or audit committee who oversee the company’s reporting and controls. In plain terms, they are the adults in the room who are supposed to challenge management before bad accounting turns into a public problem. (assets.kpmg.com) The circular pushes a simple change in behavior: fewer vague updates, more structured conversations. KPMG’s March note says the older pattern often relied on milestone-based updates, while the new expectation is deeper engagement on risks, judgments, and follow-up actions. (assets.kpmg.com) That means audit committees are expected to discuss specific things, not just receive slide decks. KPMG’s FAQ highlights items like the audit plan, significant risks, key judgments, control weaknesses, independence matters, and unresolved issues, with records showing what was discussed and what happened next. (assets.kpmg.com) The timing matters as much as the content. KPMG’s February note says the regulator expects communication throughout planning, fieldwork, and completion, so a committee is not hearing about a major problem for the first time when the financial statements are already about to be approved. (kpmg.com) The paperwork matters too. The FAQ says documentation is not a box-ticking exercise but evidence that the auditor raised the issue, the committee understood it, and the board responded, which becomes crucial if regulators later ask who knew what and when. (assets.kpmg.com) This lands on audit committees at a moment when their legal role is already broad. Section 177 of India’s Companies Act requires certain companies to have an audit committee, and that committee oversees financial reporting, internal controls, and the audit process. (ca2013.com) So the KPMG note is really describing a shift in tone as much as a shift in process. An audit committee is no longer being treated as the place where the auditor delivers a finished verdict; it is being treated as the place where tough questions are supposed to happen early enough to change the outcome. (assets.kpmg.com)