National Financial Reporting Authority (NFRA)
Source: PIB
GS II: Governance; GS III: Economics
Overview
- News in Brief
- National Financial Reporting Authority (NFRA)
Why in the News?
National Financial Reporting Authority (NFRA) to hold its inaugural edition of the international conference on Transparent Financial Reporting and Audit Quality: Pillars of Corporate Governance.
News in Brief
- This initiative aims to engage, interact, and exchange views with all stakeholders to enhance the quality of financial reporting and auditing.
- The conference’s primary focus aims to be on elevating financial reporting and audit quality, encompassing leadership, governance, and the quality of financial statements, all aimed at achieving corporate governance objectives and fostering investor trust.
- The event will feature informative sessions on wide-ranging topics led by distinguished speakers and panellists on global regulatory updates, industry trends, and best practices.
- The conference promises to be valuable in terms of educational, networking, and professional development opportunities.
- Attendees will have the opportunity to connect with regulators, industry experts, and peers, facilitating valuable networking opportunities.
- It’s a unique platform where professionals can share insights, exchange ideas, and explore potential synergies that can drive innovation and excellence in financial reporting and auditing practices.
National Financial Reporting Authority (NFRA)
- The National Financial Reporting Authority (NFRA) is an autonomous regulatory body established by the Government of India under the provisions of Section 132 of the Companies Act, 2013.
- Its primary objective is to oversee the quality of financial reporting and auditing in the country.
- Thereby enhancing transparency and reliability in corporate financial statements.
- NFRA operates independently and functions under the administrative control of the Ministry of Corporate Affairs.
Details of NFRA
- Establishment: NFRA was established on October 1, 2018, as per the provisions of the Companies Act, 2013.
- Authority: It has the authority to investigate, regulate, and discipline statutory auditors, audit firms, and other entities associated with the auditing profession.
- Composition: NFRA comprises a Chairperson, who is a person of eminence with expertise in accounting, auditing, finance, or law, and other members including officials from various regulatory bodies and professionals from relevant fields.
- Jurisdiction: NFRA has jurisdiction over certain classes of companies, including listed companies, unlisted public companies with a net worth exceeding a prescribed threshold, and certain private companies.
- Powers: It has extensive powers to impose penalties, issue orders for compliance, and even debar individuals or firms from practising as auditors for specified periods.
Importance
- Quality Enhancement: NFRA plays a crucial role in enhancing the quality of financial reporting by ensuring that companies adhere to prescribed accounting standards and auditing practices.
- Investor Confidence: The existence of a robust regulatory body like NFRA instils confidence among investors and stakeholders by assuring them of the reliability and credibility of financial information disclosed by companies.
- Enforcement Actions: NFRA has the authority to take enforcement actions against auditors and audit firms found guilty of misconduct or non-compliance with auditing standards. For instance, it can impose fines, issue warnings, or even recommend criminal prosecution in cases of severe violations.
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