New Delhi, March 6, 2018
The Centre on Tuesday stated that the National Financial Reporting Authority (NFRA), to be set up for overseeing auditing standards, will have the power to penalise audit firms for any malpractice identified.
Speaking in Rajya Sabha earlier today, Minister of State (MoS) for Corporate Affairs, Law and Justice, P.P. Chaudhary cited Section 132 of the Companies Act, 2013, which NFRA provides for the constitution of the NFRA, while subsection (4) thereof confers powers on the committee for the imposition of penalties on audit firms.
Earlier this week, the Union Cabinet chaired by Prime Minister Narendra Modi approved the proposal for establishing the NFRA as an independent regulator for the auditing profession, which is one of the key changes brought in by the Companies Act, 2013, and makes way for the creation of one post of chairperson, three posts of full-time members and one post of secretary for the committee.
However, the Centre had clarified that the inherent regulatory role of the Institute of Chartered Accountants of India (ICAI) as provided for in the Chartered Accountants Act, 1949 shall continue in respect of its members in general and specifically with respect to audits pertaining to private limited companies, and public unlisted companies below the threshold limit to be notified.
ICAI shall also continue to play its advisory role with respect to accounting and auditing standards and policies by making its recommendations to NFRA, the government said.