| Posted on : - Mar 15, 2018 |
| Question |
What is NFRA? |
| Answer |
The constitution of NFRA is enshrined in the section 132 of the Companies Act, 2013. NFRA stands for National Financial Reporting Authority (NFRA), The NFRA will act as an independent regulator for the auditing profession which was one of the key changes brought in by the Companies Act 2013. |
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| Posted on : - Mar 15, 2018 |
| Question |
What is the need for NFRA? |
| Answer |
The decision comes against the backdrop of various auditing lapses in the banking sector, including the Rs. 12,700 crore fraud at Punjab National Bank. Cabinet approves establishment of National Financial Reporting Authority: The need for establishing NFRA has arisen to establish independent regulators.
This will help enforcement of auditing standards & quality of audits to strengthen the independence of audit firms & quality of audits.This will enhance investor and public confidence in financial disclosures of companies.
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| Posted on : - Mar 15, 2018 |
| Question |
What is the Composition of NFRA? |
| Answer |
The regulator would have a chairperson and three full-time members. Besides, there would be a secretary. NFRA would be an oversight body for an oversight body for auditors and its jurisdiction would extent to all listed companies as well as large as unlisted public companies. As said by Corporate Affairs Minister Arun Jaitley “The NFRA will act as an independent regulator for the auditing profession which was one of the key changes brought in by the Companies Act 2013.”
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| Posted on : - Mar 15, 2018 |
| Question |
What are the Functions of NFRA? |
| Answer |
i. To provide recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards. ii. Monitor and enforce the compliance with accounting standards and auditing standards. iii. Oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service.
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| Posted on : - Mar 15, 2018 |
| Question |
What is the Power of NFRA? |
| Answer |
1. Will notify accounting standards to the government which audit companies need to monitor as well as adhere to. 2. Enforce such policies and standards into practices by auditors and companies. 3. Assess the service quality of the auditing profession and their compliance with the laid down policies and standards. 4. Also, in case of disciplinary misconduct by CA professionals the body will have the authority to either penalize then of debar CA or the firm for up to 10 years. 5. The regulating body shell be entrusted with the same powers as are vested with a civil court of law. 6. The body can issues summons and examine the concern on oath. 7. Can cell inspection in respect of any book, documents registers of any of the professional firm being probed.
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| Posted on : - Mar 15, 2018 |
| Question |
Jurisdiction of NFRA |
| Answer |
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 thresholds for which shall be prescribed in the Rules (has not been announced yet). The Central Government can also refer such other entities for investigation where public interest would be involved. |
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| Posted on : - Mar 15, 2018 |
| Question |
What is the Impact of NFRA? |
| Answer |
NFRA would help in improving foreign and domestic investments as well as support globalization of business by meeting international practices. The decision is expected to result in improved foreign/domestic investments, enhancement of economic growth, supporting the globalization of business by meeting international practices, and assist in further development of audit profession. |
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