The Institute of Chartered Accountants of India (ICAI) and the Office of the Comptroller and Auditor General (CAG) are jointly exploring the development of an autonomous audit framework powered by blockchain technology and artificial intelligence. Early indications suggest that the initiative aims to create a seamless system in which every transaction can be tracked as an immutable block, linked across stakeholders, and accessible to regulators in real time.
ICAI, established under an act of Parliament, serves as the national regulator for the chartered accountancy profession, while the CAG oversees audits of government entities. Representatives from both institutions have held multiple rounds of discussions, including a recent meeting last month. According to ICAI central council member Umesh Sharma, the plan is to begin implementing the new audit model within public sector undertakings during the initial rollout phase. Sharma shared these insights during his visit to Nagpur for the groundbreaking ceremony of ICAI’s new branch building.
Introducing a New Era of Automated and Connected Auditing
Sharma indicated that both ICAI and CAG have taken initial steps with full recognition of the long-term importance of autonomous audits. The envisioned system would link transactions automatically not only to various stakeholders but also to relevant departments such as the income tax and GST authorities. Officials noted that this interconnected structure aims to enhance traceability, reduce discrepancies, and ensure more accurate reporting.
Former vice-chairman of ICAI’s regional council, chartered accountant Julfesh Shah, elaborated on the underlying concept. He explained that autonomous auditing involves AI-driven mechanisms capable of performing financial assessments far beyond traditional data entry checks. These systems are expected to provide higher accuracy than manual audits, with AI agents reviewing ledgers, identifying potential risks, and preparing working papers. Shah suggested that such capabilities would enable earlier detection of irregularities and potential fraud.
Other professionals in the sector have emphasized that the integrated nature of an automated system could allow verification of every debit and credit entry across an organization. A seamless network with simultaneous access to the records of all connected parties would enhance audit reliability and provide a stronger foundation for oversight.
ICAI Advocates Key Policy Revisions in GST Compliance
In parallel with the autonomous audit initiative, ICAI has included several recommendations in its pre-Budget memorandum to the Ministry of Finance. One proposal urges the government to permit revisions of Form 3B under the GST framework. Since the form summarizes inward and outward supplies, ICAI has argued that businesses should be allowed to correct unintentional errors through revised filings, unlike the current system, where such changes are not permitted.
ICAI has also appealed for faster processing of input tax credit refunds, especially those arising from reductions in GST rates. Sharma noted that quicker disbursement would ease compliance burdens and help businesses maintain financial stability as tax structures evolve under the new regime.
The joint effort between ICAI and CAG reflects a broader shift toward integrating advanced technologies into governance and compliance. By leveraging AI and blockchain, the institutions aim to establish a more transparent, efficient, and dependable audit ecosystem that could redefine public sector oversight in the years ahead.
