CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The National Financial Reporting Authority (NFRA) will inspect the Big Four audit firms as well as other top auditors of large publicly traded companies in 2024.
National Financial Reporting Authority (NFRA)
It is a statutory body established under Section 132 of the Companies Act of 2013. It was formed as an independent authority to oversee the auditing profession and accounting standards in India. Its goal is to improve the quality and consistency of the country's financial statements, as well as to ensure that businesses and financial institutions provide accurate and fair information. The NFRA is composed of a chairperson appointed by the Central Government and up to 15 members, as per the Companies Act.
The appointment of such chairperson and members is conditional on the following qualifications-
The Head Office in New Delhi.
They should have a background in accounting, auditing, finance, or law.
They must declare to the Central Government that their appointment does not involve any conflicts of interest or a lack of independence.
All members, including the chairperson, who work full-time should not be associated with any audit firm (including related consultancy firms) during their term of office or for two years afterwards.
NFRA's Responsibilities
Make recommendations for the foundation and establishment of accounting and auditing policies and standards. Monitor and enforce compliance with accounting and auditing standards.
Oversee the quality of service of the professionals (such as auditors, CFOs, etc.) and suggest measures to improve the quality of service.Perform additional functions related to the aforementioned.
The NFRA can investigate professional misconduct by chartered accountants registered under the Chartered Accountants Act, 1949, either independently or in response to a reference from the Central Government. It has the same powers as a civil court under the Code of Civil Procedure, 1908, when trying a lawsuit. If professional or other misconduct is proven, it will have the authority to impose punishment.
Anyone who is dissatisfied with the NFRA's order may appeal to the Appellate Authority. The NFRA has jurisdiction to investigate Chartered Accountants and their firms in both listed and large unlisted public companies, with thresholds determined by the Rules. The Central Government can also refer other entities for investigation if the public interest is involved.
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