Friday, November 15, 2013

NFRA to get powers to investigate, audit firms

Apart from laying down accounting and auditing policies and standards for India Inc, the proposed
National Financial Reporting Authority (NFRA) envisaged in the new Companies Act, 2013, will
also conduct quality review of audit of listed and unlisted companies, according to the draft rules
released by the ministry of corporate affairs (MCA). With powers to lay down accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, the
proposed NFRA will be able to take over a bulk of the work currently being executed by the Institute of Chartered Accountants of India, experts said. NFRA will also undertake investigation or conduct
quality review of audit of listed companies, unlisted companies with net worth not less than Rs500 crores or paid-up capital not less than Rs500 crores or annual turnover not less than Rs1,000 crores as on March 31 of immediately preceding financial year. It will also undertake audit review of companies having securities listed outside India. The proposed entity will also be responsible for
monitoring and ensuring compliance with accounting and auditing standards. The NFRA, as per the draft rules, will have three committees - Committee on Accounting Standards, Committee on Auditing Standards and the Committee on Enforcement. The government has proposed mandatory insurance cover for company deposits as part of the suggestions outlined in the draft rules to Companies Act, 2013. As per the draft rules, defaulting firms will have to pay additional 18% annual interest on principal amount.

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