Economics
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
