National Financial Reporting Authority
Source : PIB
GS II : Statutory, Regulatory and various quasi-judicial bodies
Why in News ?
Around 6,500 entities, including insurers and banks, are under the purview of National Financial Reporting Authority (NFRA) which enforces audit quality standards.
Key Facts
NFRA is responsible for recommending accounting and auditing policies and standards in the country, undertaking investigations, and imposing sanctions against defaulting auditors and audit firms in the form of monetary penalties and debarment from practice for up to 10 years.
- NFRA has come out with a provisional database of entities under its purview as of 31 march 2019.
- The ministry said NFRA is mandated to oversee compliance by ‘public interest entities’ which include all listed companies and large unlisted entities.
- The database of entities gives clarity to businesses as well as their auditors of their statutory obligations.
- The data includes approx. 6,500 companies, comprising listed companies (around 5,300), unlisted companies (around 1,000), and Insurance and Banking Companies.
- This group includes all listed companies, and large unlisted companies.
- NFRA has in the past taken stringent measures against the statutory auditors of Infrastructure Leasing & Financial Services Ltd. entities after the group faced financial collapse leading to the government replacing its board of directors with a state appointed one.
National Financial Reporting Authority
- The National Financial Reporting Authority (NFRA) was constituted on October 2018 by the Government of India under Sub Section (1) of section 132 of the Companies Act, 2013.
- 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.
- NFRA consists of one chairman, three full-time members and one secretary.
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