National Financial Reporting Authority

In News

• The government has appointed former finance secretary Ajay Bhushan Pandey as chairman of the National Financial Reporting Authority (NFRA) for a period of three years.

National Financial Reporting Authority

• Regulatory Body:
  • It is a regulatory body constituted by the Government of India under Sub Section (1) of section 132 of the Companies Act, 2013 to oversee compliance with Accounting and Auditing Standards by companies that can be described as Public Interest Entities (PIEs). 

• Composition:
  • The Companies Act requires the NFRA to have a chairperson who will be 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;
  • Protect the public interest and the interests of investors, creditors and others associated with the companies or bodies.

• Jurisdiction:

• The jurisdiction of NFRA for investigation of Chartered Accountants and their firms under section 132 of the Act would extend to listed companies and large unlisted public companies
  • The NFRA is tasked to investigate audit of Listed Companies and Unlisted companies with net worth not less than Rs 500 crore or paid-up capital of not less than Rs 500 crore or annual turnover not less than Rs 1,000 crore as on March 31 of immediately preceding financial year, and companies having securities listed outside India. 
  • The Centre further has the power to refer the entities for investigation where public interest would be involved. The rest are regulated by ICAI.
  • The inherent regulatory role of ICAI as provided for in the Chartered Accountants Act, 1949 shall continue in respect of its members in general and specifically with respect to audits pertaining to private limited companies, and public unlisted companies. 

Source: ET