National Financial Reporting Authority
Kartavya Desk Staff
Source: BS
Context: Shri Nitin Gupta (Retd. IRS), former CBDT Chairman, has taken charge as the new Chairperson of the National Financial Reporting Authority (NFRA).
About NFRA (National Financial Reporting Authority):
• What is NFRA? NFRA is an independent regulatory authority under the Ministry of Corporate Affairs, tasked with improving transparency, credibility, and quality of financial reporting and auditing in India.
• NFRA is an independent regulatory authority under the Ministry of Corporate Affairs, tasked with improving transparency, credibility, and quality of financial reporting and auditing in India.
• Constituted on: 1st October 2018
• Established under: Section 132(1) of the Companies Act, 2013
• Headquarters: New Delhi, India
• Objectives and Mandate:
• Regulate and enforce compliance with accounting and auditing standards. Recommend policies and standards for corporate financial governance. Monitor the quality of auditing services and suggest improvements. Investigate professional misconduct of auditors in certain classes of companies. Uphold public and investor interest by ensuring high-quality financial disclosures.
• Regulate and enforce compliance with accounting and auditing standards.
• Recommend policies and standards for corporate financial governance.
• Monitor the quality of auditing services and suggest improvements.
• Investigate professional misconduct of auditors in certain classes of companies.
• Uphold public and investor interest by ensuring high-quality financial disclosures.
• Coverage: Who Comes Under NFRA?
• Listed companies on Indian or foreign stock exchanges. Unlisted public companies meeting any of the following: Paid-up capital ≥ ₹500 crore Turnover ≥ ₹1,000 crore Loans, deposits, debentures ≥ ₹500 crore Insurance companies, banks, power companies, and those under special Acts. Foreign subsidiaries/associates of Indian companies contributing ≥ 20% of income or net worth. Any entity referred by the Central Government in public interest.
• Listed companies on Indian or foreign stock exchanges.
• Unlisted public companies meeting any of the following: Paid-up capital ≥ ₹500 crore Turnover ≥ ₹1,000 crore Loans, deposits, debentures ≥ ₹500 crore
• Paid-up capital ≥ ₹500 crore
• Turnover ≥ ₹1,000 crore
• Loans, deposits, debentures ≥ ₹500 crore
• Insurance companies, banks, power companies, and those under special Acts.
• Foreign subsidiaries/associates of Indian companies contributing ≥ 20% of income or net worth.
• Any entity referred by the Central Government in public interest.
• Features of NFRA:
• Statutory autonomy with investigative powers. Can issue directions, debar auditors, and impose penalties. Ensures global alignment with international standards (IFRS, ISA). Promotes corporate governance, investor trust, and audit quality. Strengthens oversight on statutory auditors and financial reporting ecosystem.
• Statutory autonomy with investigative powers.
• Can issue directions, debar auditors, and impose penalties.
• Ensures global alignment with international standards (IFRS, ISA).
• Promotes corporate governance, investor trust, and audit quality.
• Strengthens oversight on statutory auditors and financial reporting ecosystem.
• Significance of NFRA:
• Acts as a watchdog for corporate financial discipline. Bridges gaps in audit oversight missed by self-regulatory bodies like ICAI. Enhances investor confidence, especially in large unlisted entities.
• Acts as a watchdog for corporate financial discipline.
• Bridges gaps in audit oversight missed by self-regulatory bodies like ICAI.
• Enhances investor confidence, especially in large unlisted entities.