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National Financial Reporting Authority

  • IASbaba
  • December 6, 2022
  • 0
Economics
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In news: The National Financial Reporting Authority (NFRA) has started inspections of five audit firms.

  • The Conference on “Financial Reporting & Governance Framework – Building Trust” was organised by the Confederation of Indian Industry(CII)
  • There is a need to revisit the existing short-term and vague ‘Going Concern’ accounting concept and replace it with long-term viability or Resilience Statements by the Management and Board.

About NFRA:

  • It is the country’s sole independent audit regulator.
  • It was constituted in 2018 by the Government of India
  • It was established under the Companies Act, 2013.
  • It comes under Ministry of Corporate Affairs.

Aim:

  • To continuously improve the quality of all corporate financial reporting in India.

Composition:

  • Chairperson is a Chartered Accountant and a person of eminence having expertise in accountancy, auditing, finance or law (appointed by the Central Government) and a maximum of 15 members.

Functions and Duties:

  • Recommend accounting and auditing policies and standards to be adopted by companies for approval by the Central Government;
  • Monitor and enforce compliance with accounting standards and auditing standards;
  • Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service

Powers:

  • The NFRA has the same powers as the Civil Court.
  • Debarring the member/firm from practice as a member of ICAI between 6 months to 10 years as may be decided.
  • To investigate the matters of professional or other misconduct.

Scope:

  • Companies listed in India
  • Unlisted Companies whose:
  • Net worth ≥ Rs. 500 crore; or
  • Paid up Capital ≥ Rs. 500 crore; or
  • Annual turnover ≥ Rs. 1000 crore (As on 31st March of the preceding financial year); OR
  • Companies whose securities are listed outside India

Source: The Hindu Business Line

 

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