From UPSC perspective, the following things are important :
Prelims level : NFRA
Mains level : Not Much
Audit regulator National Financial Reporting Authority (NFRA) wants to be positioned as a regulator for the entire gamut of financial reporting, covering all processes and participants in the financial reporting chain.
What is NFRA?
- NFRA is an independent regulator to oversee the auditing profession and accounting standards in India under Companies Act 2013.
- It came into existence in October 2018.
- After the Satyam scandal took place in 2009, the Standing Committee on Finance proposed the concept of the National Financial Reporting Authority (NFRA) for the first time in its 21st report.
- Companies Act, 2013 then gave the regulatory framework for its composition and constitution.
- NFRA works to improve the transparency and reliability of financial statements and information presented by listed companies and large unlisted companies in India.
Powers & duties
- NFRA is responsible for recommending accounting and auditing policies and standards in the country.
- It may undertake investigations, and impose sanctions against defaulting auditors and audit firms in the form of monetary penalties and debarment from practice for up to 10 years.
- Since 2018, the powers of the NFRA were extended to include the governing of auditors of companies listed in any stock exchange, in India or outside of India, unlisted public companies above certain thresholds.