The Union Cabinet has approved the proposal for establishment of National Financial Reporting Authority (NFRA). An independent regulator for the auditing profession which is brought in existence as per Sec 132 of Companies Act 2013.
National Financial Reporting Authority (NFRA) is a body proposed in Companies Act 2013 for the establishment and enforcement of accounting and auditing standards and oversee the quality of the services of professions associated with ensuring compliance with such standards.
It is set to act as the overarching watchdog for auditing profession and the current powers of the ICAI to act against erring chartered accountants will be vested with the new regulator.
The NFRA will have powers to debar an erring auditor or auditing firm for up to ten years besides slapping heavy penalties.
NFRA will extend to all listed companies as well as large unlisted public companies. Besides, the government can refer other entities for investigation by the NFRA where public interest would be involved.
Constitution of NFRA : The regulator will have 15 members, including a chairperson and three full-time members. Besides, there would be a secretary.