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National Financial Reporting Authority

Context:

NFRA recently pulled up a section of India Inc, including “a large listed firm”, for not complying with Indian Accounting Standards (Ind AS)

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. National Financial Reporting Authority (NFRA)
  2. Functions and Duties
  3. Powers

National Financial Reporting Authority (NFRA):

  • NFRA was established on October 1st, 2018 under the Companies Act, 2013
  • It is an independent regulator overseeing the auditing profession and accounting standards in India
  • The objective is to continuously improve the quality of corporate financial reporting in India
  • The headquarters of NFRA is located in New Delhi.

Functions and Duties

  • Recommends accounting and auditing policies and standards for approval by the Central Government
  • Monitors and enforces compliance with accounting and auditing standards
  • Oversees the quality of service of professions related to compliance and suggests measures for improvement
  • Composition includes a chairperson with expertise in accountancy, auditing, finance, or law and up to 15 members

Powers

  • NFRA can investigate professional or other misconduct by any member or firm of chartered accountants registered under the Chartered Accountants Act, 1949, either suo moto or on a reference made by the Central Government
  • Has the same powers as a civil court under the Code of Civil Procedure, 1908 while trying a suit

-Source: Times of India


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