NATIONAL FINANCIAL REPORTING AUTHORITY - SERIES 400
MCA vide its notification dated 13th November 2018 notified National Financial Reporting Authority (NFRA) Rules 2018. This is step Narendra Modi administration attempts to strengthen the country’s financial system hit by Rs 12,700-crore fraud.
As per the Companies Act, 2013 the NFRA is tasked with the job of recommending accounting and auditing standards, ensuring compliance with them and overseeing the quality of service of the accounting and audit professions.
It has also been given the power to investigate matters of professional misconduct by chartered accountants or CA firms, impose penalty and debar the CA or firm for up to 10 years.
The ICAI will continue to exercise these powers over small companies. The NFRA will have jurisdiction over listed companies and large, unlisted companies.
NFRA is not meant to replace the disciplinary
Jurisdiction of the ICAI. Therefore in all the routine cases,
As per Rule 3 the Authority shall have power to, monitor and enforce;
Ø Compliance with accounting standards and
Ø Auditing Standards,
Ø Oversee the Quality of Service
- Paid up Capital or Loans > = INR 500 crores
- Turnover > = INR 1000 crores OR
- Outstanding Loan, Debentures and Deposit >= INR 500 crores
c) All Banks/ Insurance/ Electricity Companies.
**NOTE: Once a Company falls under the above limits under NFRA, will be covered by NFRA for 3 More years.
Ø maintain details of particulars of auditors appointed in the companies and bodies corporate specified in rule 3;
Ø recommend accounting standards and auditing standards for approval by the Central Government;
Ø monitor and enforce compliance with accounting standards and auditing standards;
Ø 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;
Ø promote awareness in relation to the compliance of accounting standards and auditing standards;
Ø co-operate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards; and
Ø perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.
a. Notifying Accounting Standards & Auditing Standards –
b. Monitoring Compliance of AS –
c. Monitoring Compliance of SA –
F. Monitoring and Regulating Powers –
(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at firstname.lastname@example.org). Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION