Central Government has notified National Financial Reporting Authority Rules’ 2018 dated 13/11/2018 and shall come into force on the date of their publication in the official Gazette. Such Authority shall have power to monitor and enforce compliance with accounting standards and auditing standards, oversee the quality of service or undertake investigation of the auditors of the class of companies and bodies corporate prescribed.
Following are the features and compliance to be followed by the prescribed companies-
Powers and Responsibilities of NFRA
o NFRA may review the financial statements of such company or body corporate, as the case may be, and if so required, direct such company or body corporate or its auditor by a written notice, to provide further information or explanation or any relevant documents relating to such company or body corporate.
o NFRA may require the personal presence of the officers of the company or body corporate and its auditor for seeking additional information or explanation.
o Where the Authority finds or has reason to believe that any accounting standard has or may have been violated, it may decide on the further course of investigation or enforcement action through its concerned Division.
o The Authority shall publish its findings relating to non-compliances on its website
o The Authority may review working papers (including audit plan and other audit documents) and communications related to the audit. It may evaluate the sufficiency of the quality control system and perform such other testing of the audit, supervisory, and quality control procedures of the auditor as may be considered necessary or appropriate.
o The Authority may require an auditor to report on its governance practices and internal processes designed to promote audit quality, protect its reputation and reduce risks including risk of failure of the auditor and may take such action on the report as may be necessary.
o The Authority may seek additional information or may require the personal presence of the auditor for seeking additional information or explanation in connection with the conduct of an audit.
o The Authority shall also oversee the quality of service and suggesting measures for improvement.
Powers under Section 132 of the Companies Act, 2013
– Statutory Central Audit-
– Bank Branch Audit other than Foreign Exchange Transactions –
– Foreign Exchange Transactions and Integrated Treasury –
Interested in this topic or wanting to know more? Share your thoughts and we will be happy to assist.