E-Signatures for Audit Reports in India Are Allowed — Should Be Required

CFA Institute not only has supported the use of structured data for financial reporting but also has argued that structuring should extend beyond the financial statements to the management discussion and analysis, earnings releases, and tax reporting — indeed, to all forms of reporting. We argue that all reports in their entirety should be digital (i.e., machine-readable).

In this vein of increasing the digital usability of reports, the Institute of Chartered Accountants of India (ICAI) has announced a policy change permitting the use of electronic signatures to sign audit reports and certificates for the first time. The ICAI has said,

The members of ICAI may use an e-signature for signing audit reports, all reports issued pursuant to any attestation engagement and certificates. However, the members need to ensure compliance with all the requirements relating to signature prescribed in the relevant law or regulation, Standards on Auditing, and relevant announcements/ clarifications issued by ICAI on the matter.

We believe that such electronic signatures should not just be permitted but, indeed, be required. Introducing e-signatures is a useful step toward increasing the digital usability and security of reports. XBRL International notes that to ensure effective security and digital trust of online business reports, further steps can be taken. For example, adopting the legal entity identifier within digital signatures is one way to improve the veracity of a digital report and enhance confidence in its origins.

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