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National Financial Reporting Authority (NFRA)

National Financial Reporting Authority (NFRA)

Why in news?

  • The National Financial Reporting Authority (NFRA) has prepared a provisional database of companies and auditors that come under its regulatory ambit.
  • NFRA has the mandate to oversee compliance with accounting and auditing standards by certain class of companies, described as Public Interest Entities (PIEs).
  • In 2020, NFRA constituted a Technical Advisory Committee (TAC) to aid and advise the executive body of the NFRA on issues relating to drafts of accounting standards and auditing standards.
  • The TAC comprises seven members including the chairman – R. Narayanaswamy.

About National Financial Reporting Authority (NFRA)

  • NFRA was constituted in 2018 by the Government of India under section 132 (1) of the Companies Act, 2013. It is an audit regulator.
  • The decision to constitute the NFRA was taken after the role of auditors and the Institute of Chartered Accountants of India came under the scanner for alleged lapses in various corporate scams including that at the Punjab National Bank.
  • It consists of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance or law, appointed by the Central Government and such other members not exceeding 15.

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;
  • Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.                        National Financial Reporting Authority (NFRA)

Powers

  • It can probe listed companies and those unlisted public companies having paid-up capital of no less than Rs 500 crore or annual turnover of no less than Rs 1,000 crore.
  • It can investigate professional misconduct committed by members of the Institute of Chartered Accountants of India (ICAI) for prescribed class of body corporate or persons.

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