New Delhi, March 23, 2018

The chairperson and full-time members of NFRA should not be associated with any audit firm during their tenure as well as two years after demitting office, according to the government.

Less than a month after the Cabinet approved setting up of the National Financial Reporting Authority (NFRA), the Corporate Affairs Ministry has come out with the norms for appointment of members to the body.

According to the NFRA (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018, the chairperson as well as full time members would have a three-year term each.

They would be eligible for re-appointment for one more term. Another condition is that the appointment would be for three years or till the person attains 65 years age, whichever is earlier.

In the case of a part-time member, the tenure would be not more than three years but eligible for re-appointment.

"The chairperson and full-time members, shall not be associated with any audit firm including related consultancy firms during the course of their appointment and two years after ceasing to hold such appointment," the rules said.

Besides chairperson, NFRA would have three full-time and nine part-time members.

Among others, president of the Institute of Chartered Accountants of India (ICAI) would be a part-time member.

The chairperson and all members, before being appointed, are required to submit a declaration to the government stating that they "have no conflict of interest or lack of independence" in respect of the appointments.

"In case of a vacancy in the office of the chairperson or a full-time member, the central government shall have the power to appoint the senior most full-time member or in his absence any other full time member to officiate as chairperson," as per the rules.

NFRA chairperson would get a fixed salary of Rs 2.50 lakh per month while full-time members would receive Rs 2.25 lakh per month. The amount would be in addition to allowances and benefits.

A search-cum-selection committee, chaired by Cabinet Secretary, would recommend names to the government for appointments of chairperson and full time members. In the case of full time members, NFRA chairperson would also be part of the committee.

On March 1, the Cabinet approved setting up of the NFRA, which would be an independent regulator for the auditing profession.

The jurisdiction of the NFRA -- which would be an oversight body for auditors -- would extend to all listed companies as well as large unlisted public companies.

[The Economic Times]