National Financial Reporting Authority

• The National Financial Reporting Authority (NFRA) is going to inspect the Big Four audit firms (Deloitte Haskins & Sells BSR & Co (EY), SRBC & Co (KPMG) and Price Waterhouse Chartered Accountants, Walker Chandiok and Co) as well as other top auditors of large listed entities in 2024.

ABOUT NFRA

• It is the country’s sole independent audit regulator.
• Constituted in 2018, under the Companies Act, 2013.
• It comes under the purview of Ministry of Corporate Affairs.
• Its goal is to enhance the country’s financial statement quality and consistency and to guarantee that businesses and financial institutions report accurate and fair information.
• It has the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit.
• The Chairperson is a Chartered Accountant and a person of eminence having expertise in accountancy, auditing, finance or law (appointed by the Central Government) and a maximum of 15 members.
• All the members, including the chairperson, who are in full-time employment, should not be associated with any audit firm (including related consultancy firms) during their term of office and 2 years after their term.
• Functions include-
  • Recommend accounting and auditing policies and standards to be adopted by companies for approval by the Central Government;
  • Monitor and enforce compliance with accounting standards and auditing standards;
  • Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service;
  • Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.
• For inspection, the NFRA adheres to the regulations outlined in the Companies Act, 2013 meant for auditors to follow, and the audit standards and guidelines established by the Institute of Chartered Accountants of India.
  • These include the Code of Ethics, which enumerates potential threats such as those associated with self-interest, self-review, advocacy, familiarity, and intermediation.