National Financial Reporting Authority (NFRA)

Context:

• National Financial Reporting Authority (NFRA), has constituted a Technical Advisory Committee (TAC) under the Chairmanship of R Narayanaswamy, Professor, Indian Institute of Management, Bengaluru.

What is the National Financial Reporting Authority?

• The National Financial Reporting Authority (NFRA) under the Companies Act 2013, will be an independent regulator for the auditing profession.

Objectives:

• Establishment and enforcement of accounting and auditing standards and oversight of work of auditors.
• Strengthen independence of audit firms and therefore, enhance investor and public confidence in financial disclosures of companies.

Jurisdiction and functions:

• Investigation of Chartered Accountants and their firms to all listed companies as well as large unlisted public companies.
• Government can also refer other entities for investigation where public interest is involved.
• It subsumes certain powers of the Institute of Chartered Accountants of India (ICAI) to act against erring chartered accountants.
• It can debar an erring auditor or auditing firm for up to 10 years and slap penalties.
• However, the role of existing ICAI will continue in the following respects:
  • Issues associated with its members
  • Audits of private limited companies and public unlisted companies below the threshold limit.
  • Advisory role with respect to accounting and auditing standards.

PRELIMS QUESTION

Consider the following statements related to National financial reporting authority:

1.    It regulates Chartered accountants and other auditing bodies of India.
2.    It was established under the companies act,2013.

Which among the above statements is/are correct?
(a)    1 only 
(b)    2 only 
(c)    Both 1 and 2
(d)    Neither 1 nor 2
Answer to prelims question