NFRA's Auditor-Audit Committee Interaction Series

The National Financial Reporting Authority (NFRA) has launched the first part of its Auditor-Audit Committee Interaction Series aimed at enhancing communication between auditors and audit committees, thereby improving audit quality.

Importance of Communication

• NFRA emphasizes the significance of communication between auditors and those charged with governance (TCWG).
• The initiative draws on requirements from various standards and the Companies Act, 2013.

Key Focus Areas

• Auditors should be prepared for questions on: 
  • Accounting estimates and judgments.
  • Audit of expected credit losses as per Ind AS 109, Financial Instruments.
• Enhancement of audit quality and promotion of accounting and auditing standards.

Effective Two-Way Communication

• NFRA Chairman highlighted the need for robust interaction between TCWG and auditors.
• Audit committees and independent directors should: 
  • Ask auditors pertinent questions.
  • Maintain professional skepticism.
  • Not accept information passively.

Such communication is expected to enhance stakeholder and shareholder confidence in corporate financial statements.

Sovereign Artificial Intelligence: A Strategic Imperative

The article discusses the importance of a Sovereign AI strategy for India in the age of AI, emphasizing its implications for economic and national security. The author proposes a framework for building this strategy, integrating government and private AI initiatives.

GovAI + Private AI = Sovereign AI

• AI's Role: AI acts as a transformative layer on digital infrastructure, enhancing efficiency and service delivery.
• GovAI: The deployment of AI in governance (GovAI) can significantly impact public services by making them smarter and more predictive.
• DPI + AI = GovAI: Digital Public Infrastructure (DPI), which includes vast data repositories, serves as the foundation for GovAI.
• Data Utilization: The India Datasets Programme aims to provide non-personal or anonymized data for AI training, crucial for developing India’s AI capabilities.

Developing an Architecture for GovAI

• Dataset Utilization: DPIs like Diksha can train AI models for improved service delivery, such as smarter education outcomes.
• Small Language Models (SLMs): Models for specific use cases can evolve into large language models (LLMs) through cooperative learning.
• Future Collaboration: Sovereign AI models could collaborate with other AI models globally to enhance learning and move towards artificial general intelligence (AGI).

Government and Innovators Partnership

• Leadership Support: India's Sovereign AI initiative requires backing akin to that provided to the Digital India and Semiconductor Mission.
• Partnerships: Collaboration between government, private sector, and academia is crucial for building AI models, platforms, and talent.
• Global Impact: Developing Sovereign AI could position India as a leader in safe, trusted AI, especially for the Global South.

Kisan Credit Card (KCC) Scheme Update

The central government is anticipated to increase the borrowing limit under the Kisan Credit Card (KCC) scheme from Rs 3 lakh to Rs 5 lakh in the upcoming Union Budget for FY26. This update is expected to be announced on February 1.

Rationale for the Increase

• The last revision of the KCC limit occurred some time ago.
• Continuous demands have been received by the government to raise the limit.
• The increase aims to support farmers and boost rural demand.

The government's decision to enhance the borrowing limit under the KCC scheme reflects its commitment to addressing the financial needs of the agricultural sector and stimulating economic activity in rural areas.