During FY 2024-25, NFRA exercised its powers under the Companies Act 2013 to strengthen audit oversight and ensure accountability of auditors of Public Interest Entities (PIEs). It issued 23 disciplinary orders against auditors for professional misconduct, highlighting severe deficiencies in audits of high-profile entities like Coffee Day Group, Brightcom Group, DB Realty, Reliance entities, Zee Limited, DHFL, and others. Key lapses included failure to assess fraud risk, improper evaluation of loans and related party transactions, insufficient audit evidence, inadequate documentation, and lack of professional skepticism. NFRA also conducted firm-wide audit quality inspections of leading audit firms, identifying gaps in independence, internal controls, audit documentation, related party transaction verification, and quality control procedures. The regulator issued circulars to reinforce auditors’ responsibilities in group audits and recommended 40 high-quality auditing standards to MCA, alongside amendments to Indian Accounting Standards and accounting frameworks for LLPs, aligning domestic regulations with global best practices to safeguard investors, creditors, and public interest.
Key Results and Achievements
1. Disciplinary Orders
During the year 2024-25, in pursuance of powers under section 132 (4) of the Companies Act 2013, NFRA issued 23 Disciplinary orders for professional or other misconduct in respect of auditors of Public Interest Entities (PIEs) involving substantial public interest. These involved examination/ investigation into matters referred to NFRA by the Ministry of Corporate Affairs, Securities and Exchange Board of India and other organisations, including cases taken up suo motu by NFRA. Action was taken in cases where quality of audit was found to be severely deficient, including in respect of Group audits. In several cases, NFRA observed severe deficiencies and lack of understanding on the part of the auditors of their responsibilities in law and improper application of the standards by the auditors, thereby impacting investor, creditor and public interest. Major orders issued by NFRA during the Financial Year 2024-25 are highlighted as follows:
i) Orders issued in the matter of Coffee Day Group
Coffee Day Enterprises Limited (CDEL), a listed parent company of the Coffee Day Group, engaged in coffee and hospitality business, diverted Rs. 3,535 crore from seven CDEL subsidiaries to Mysore Amalgamated Coffee Estate Limited (MACEL), a promoter-owned entity.
a) Order in matter of CDEL for the Financial Year 2018-19
CDEL’s funds of Rs 2,226 crores were diverted to MACEL through complex intra-group circular transfers. The outstanding balance receivables from MACEL was understated using uncashed cheque entries to reflect loan repayments. Rs. 2,549 crores in loans to a promoter-controlled entity were fraudulently understated by Rs. 1,706 crores to Rs 849 crores through such entries and evergreening via fund circulation.
NFRA’s examination revealed that the auditor was grossly negligent in assessing the business rationale of such loans and recoverability thereof. Appropriate audit procedures to obtain sufficient appropriate audit evidence to issue audit opinion on the financial statements were not performed. The exposure of CDEL group to MACEL was considered as an important area for audit, but the auditors neither performed the required audit procedures, nor ensured appropriate audit procedures by the other auditors. The auditor did not exercise professional judgement and skepticism. The auditor failed to verify the end use of Rs. 1,055.73 crores in loans and Rs. 1,015 crores in guarantees provided by CDEL to its subsidiaries, as required under the provisions of the Companies Act.
The auditor failed to assess fraud risk in recognition of Rs. 75 crores of interest income by Tanglin Developments Ltd., a subsidiary of CDEL, on loan given to MACEL, which did not recognise corresponding interest expense. This resulted in CDEL wrongly reporting a profit of Rs. 27.93 crores instead of a loss of Rs. 47.07 crores.
The firm’s audit documentation system did not comply with Standard on Auditing (SA) 230 and authorization after sign-off and issuance of the audit report, breaching the requirements of SA 230 and SQC 1.
b) Order in matter of CDEL for Financial Year 2019-20
The matter regarding financial irregularities in Coffee Day Group was investigated and an investigation report was available to the auditor, highlighting multiple red flags indicating fraud including lack of commercial rationale in giving loans by subsidiaries of CDEL to MACEL (Rs 3512 crores), evergreening of loans, and the use of pre-signed blank cheques to divert funds.
NFRA found that CDEL’s auditors for FY 2019-20 ignored all red flags and chose not to access the subsidiaries’ books and records. The auditors issued a disclaimer on CDEL’s financial statements due to concerns over Rs. 3,512 crores linked to MACEL. However, the auditor ignored red flags and did not report the fraud, violating auditing standards and legal provisions. The auditor did not verify whether CDEL passed necessary special resolution before extending Rs. 1,941.46 crores in loans and guarantees to its subsidiaries, and whether the funds were used for their principal business activities.
ii) Order in matter of Brightcom Group Limited (BGL) for Financial Years 2019-20, 2020-21 and 2021-22.
Brightcom Group Limited (BGL), a listed entity, was engaged in digital advertising and media. Information regarding financial irregularities involving BGL and its auditors prompted an investigation into potential professional misconduct. The auditors were asked to provide audit files and crucial documents. The auditors provided incomplete information to NFRA. The auditor failed to comply with statutory requirements, exhibited gross negligence, and lacked due diligence in their professional conduct. Despite a show cause notice for non-cooperation and multiple opportunities for personal hearings, the firm remained uncooperative. Auditor also submitted a false affidavit to avoid both, the submission of documents and personal hearings.
iii) Order in matter of DB Realty Limited (DBRL) for Financial Year 2015-16
DBRL, a listed company, is engaged in the real estate business. NFRA’s investigation into DB Realty Limited (DBRL) found serious lapses in audit procedures performed by the Auditor and Engagement Quality Control Reviewer (EQCR). The Auditor failed to exercise professional skepticism, conduct appropriate audit procedures, and obtain sufficient audit evidence regarding Rs 3,894.43 crores in guarantees and securities given to lenders of related parties. The audit report misled the financial statement users, with a qualified opinion on an immaterial item of Rs 1.92 lakhs, while parking significant financial issues of Rs 6,972 crores in Emphasis of Matter paragraph in the audit report without performing appropriate audit procedures. The auditor failed to properly assess loans and advances worth Rs 1,326.92 crores (Rs 1,079 crores given to related parties) and investments of Rs 2,456 crores in financially weak related parties.
iv) Order in matter of Vikas WSP Ltd. for Financial Year 2019–20
The audit firm which conducted statutory audit of Vikas WSP Ltd. for FY 2019–20 was held guilty of professional misconduct for failing to comply with Standards on Auditing (SAs), Standards on Quality Control (SQC 1), and the Code of Ethics. Key violations included failure to report on material misstatements in financial statements due to non-recognition of interest costs on NPA loans, absence of adequate audit documentation, non-appointment of EQCR, and lack of documented audit evidence of communication with Those Charged with Governance. The firm did not ensure compliance with quality control procedures or demonstrate due diligence.
v) Order in matter of Vikas Proppant and Granite Limited for Financial Years 2018-19, 2019-20 and FY 2020-21
Vikas Proppant and Granite Limited, a listed Company was engaged in the mining of Granite Blocks and manufacturing of Proppants. In this matter two orders were issued whose details are highlighted as follows:
For 2018-19 and 2019-20
The audit failures included failure to plan the audit and understand the nature of the entity and its environment, failure to evaluate the internal audit function, failure to determine materiality and performance materiality, failure to report the non-provisioning in respect of the Expected Credit Loss, failure to evaluate the arm’s length pricing for the Related Party Transactions, failure to report non charging of depreciation of leasehold land and plant & machinery, failure to assemble the Audit File within 60 days of the completion of the audit, failure to obtain sufficient and appropriate audit evidence & failure to determine appointment of Engagement Quality Control Reviewer (EQCR).
For FY 2020-21
The audit failures included failure to report the non-provisioning in respect of expected credit loss , failure to evaluate the arm’s length pricing regarding the compliance of Section 177 & 188 for the Related Party Transactions, failure to plan the audit and understand the nature of the entity and its environment, failure to verify opening balances, failure to determine materiality and performance materiality, failure to report on the entity’s ability to continue as a Going Concern, failure to report non charging of depreciation of leasehold land and plant & machinery, failure to assemble the audit file within 60 days of the completion of the audit, failure to obtain sufficient and appropriate audit evidence through external confirmations, failure to appropriately communicate with Those Charged With Governance, failure to appoint of Engagement Quality Control Reviewer (EQCR).
vi) Order in matter of Ushdev International Limited (UIL) for Financial Year 2017-18
UIL was primarily engaged in the business of metal trading and wind power generation. The company was undergoing Corporate Insolvency Resolution Process (CIRP). The audit failures include the auditor’s failure to analyse the significant increase in provision for trade receivables and advances from a fraud angle and discharge his obligations under Section 143(12) of the Companies Act 2013, failure to obtain sufficient appropriate audit evidence (SAAE) in the audit of valuation of UIL’s investments in fellow subsidiaries and another company whose group companies had defaulted on the receivables due from them, failure in maintaining proper audit documentation, failure to point out non-compliances with Ind AS 16 etc.
vii) Order in matter of CMI Limited for Financial Years 2019-2020, 2020-21 and 2021-22
CMI Limited is engaged in designing and manufacturing of electrical wires, cables and conductors. The auditors failed to report a misstatement involving non-recognition of interest on NPAs, which understated interest cost, current liabilities, and the company’s reported loss. They ignored going concern risks despite CMIL’s revenue falling from ₹637.30 crore in FY 2018-19 to ₹201.70 crore in FY 2020-21, PAT from ₹45.08 crore to (-) ₹194.60 crore, and net worth from ₹305.97 crore to ₹117.12 crore. Critical audit procedures lacked sufficiency in areas like materiality, inventory, revenue, and audit results. No physical verification was done for inventories worth ₹187.67 crore, ₹154.47 crore, and ₹36.67 crore in FY 2019-20, 2020-21, and 2021-22 respectively. External confirmations for trade receivables of ₹231.34 crore, ₹135.29 crore, and ₹110.64 crore were also not obtained, alongside failure to comply with standards on engagement quality control and communication with Those Charged With Governance.
viii) Order in matter of Sanwaria Consumer Limited for Financial Year 2017-18
Sanwaria Consumer Limited is engaged in trading and manufacturing of rice, soya products, oils and other edible items.
The Auditor failed to verify inventories, leading to overvaluation of soya seed by ₹18.93 crore and paddy by ₹13.30 crore. He did not assess ownership or impairment of investments worth ₹38.42 crore in loss-making subsidiaries and associates. There was failure to report non-compliance with consolidation requirements, and in-sufficient audit evidence was obtained for unsecured trade receivables amounting to ₹57.86 crore. Risk assessment for revenue of ₹524.17 crore was not carried out, increasing the risk of material misstatement. Audit documentation was inadequate, and internal control deficiencies were not communicated to Those Charged With Governance.
ix) Order in matter of Reliance Capital Limited for Financial Year 2018–19:
In the audit of Reliance Capital Limited (RCL), the auditors demonstrated significant audit deficiencies. The Consolidated Financial Statements for FY 2018–19 show that RCL maintained bank loans of approximately ₹12,000 crore and external borrowings nearing ₹32,000 crore, which were used to finance loans and investments in group companies. The joint auditor, who resigned without issuing an audit report, flagged suspected fraud involving about ₹12,571 crore in loans and investments to certain related parties.
However, the continuing auditor failed to independently verify these serious concerns. Their shortcomings were compounded by self-review practices, the inappropriate use of an Emphasis
of Matter paragraph in the audit report and inadequate scrutiny of management’s assertions regarding the recoverability of ₹6,557 crore in loans and a ₹2,577 crore Expected Credit Loss provision. Consequently, the reliability of the audit opinion and the financial statements was severely undermined.
x) Order in matter of Reliance Commercial Finance Limited for Financial Year 2018–19:
In respect of Reliance Commercial Finance Limited, the audit failures included accepting the engagement without consulting the predecessor auditor and deviating from the firm’s quality control policies. Instead of modifying the audit report, an inappropriate Emphasis of Matter was included in the audit report, improperly conveying management’s stance on suspected fraud. Furthermore, the auditors failed to obtain sufficient evidence regarding the Expected Credit Loss provision of ₹537 crore on
loans amounting to ₹12,224 crore and did not adequately question management’s assertions. The Auditors also failed to adequately examine the end-use of loans, indications of siphoning of funds from the company, management override of controls, and the business rationale of sanctioning and disbursing loans by the Company. None of these factors was adequately reflected in the Auditor’s assessment of risks of material misstatement due to fraud. These lapses in professional skepticism and due diligence rendered the audit opinion misleading.
xi) Order in the matter of Reliance Home Finance Limited for Financial Year 2018–19:
For Reliance Home Finance Limited, as of 31 March 2019, total assets stood at approximately ₹18,100 crore, with external liabilities of about ₹6,300 crore, over ₹4,800 crore of which comprised debt from debentures, bank borrowings, and commercial papers. The auditors displayed gross negligence in evaluating risks linked to loan disbursements. Despite the resignation of the previous auditor and fraud concerns involving nearly ₹7,900 crore in loans, auditor failed to scrutinise the company’s practice of extending General Purpose Corporate Loans to financially weak entities, which had led to funds being diverted to other group companies. The audit also fell short in rigorously assessing the going concern assumption and validating the Expected Credit Loss (ECL)—recorded at approximately ₹278 crore on loans of ₹6,259 crore, with only about ₹173 crore recognised on nearly ₹7,849 crore in credit-impaired loans—ultimately compromising the reliability of the audit opinion.
xii) Order in the matter of Zee Limited for Financial Year 2018–19 and 2019–20:
During FY 2018–19 and 2019–20, significant audit lapses were observed at Zee Limited in its ambit of related party transactions. The auditors failed to report a significant transaction involving the group chairman and a major private sector bank. The auditors were grossly negligent, lacking requisite skepticism and due diligence, failing to challenge management assertions or assess suspected fraud which needed to be reported under Section 143(12) of Companies Act 2013, which was evidenced by unauthorised guarantees, premature fixed deposit closure, and misuse of ZEEL’s funds.
xiii) Order in the matter of DHFL Branch Auditors for Financial Year 2017–18:
NFRA examination revealed critical audit deficiencies by the DHFL branch auditors. They accepted their appointments in FY 2017-18 without sufficient legal basis and subsequently issued an audit report without ensuring that the financial statements and associated records were thoroughly examined by a competent team member. This fundamental oversight in basic audit procedures cast significant doubts on the reliability of the audit process and the robustness of the internal control environment.
2. Firm-Wide Audit Quality Inspections
In keeping with the functions entrusted to NFRA under Section 132 of the Companies Act 2013, audit quality inspections are a key tool with the Regulator to fulfil its statutory obligations. The mandate for inspections is derived under Section 132 (2) of the Companies Act 2013 and relevant provisions in NFRA Rules 2018. The overall objective of inspections is to evaluate compliance of the audit firm/auditor with auditing standards and other regulatory and professional requirements, and the sufficiency and effectiveness of the quality control system of the audit firm/auditor including:
i) adequacy of governance framework and its functioning
ii) effectiveness of firm’s internal control over audit quality
iii) system of assessment and identification of audit risks and mitigating measures
As a follow-up of NFRA inspections, audit firms in India have either updated or undertaken to update their policies regarding providing non-audit services to their audit clients. This is a significant improvement in large audit firms’ policies around adherence to independence requirements (which is the starting point for ensuring audit quality) by most of the inspected large audit firms.
As on 31 March 2025, 12 inspection reports have been published on NFRA website (https://nfra.gov.in/document-category/inspection-reports/).
In all audit quality inspections, focus areas were internal financial controls over revenue, related party transactions, and impairment of non-financial assets. Firm-wide inspections by NFRA during FY 2024-25 are highlighted as follows:
(i) M/s Price Waterhouse Chartered Accountants LLP and M/s Price Waterhouse & Co Chartered Accountants LLP:
NFRA conducted audit quality inspections of M/s Price Waterhouse Chartered Accountants LLP and M/s Price Waterhouse & Co Chartered Accountants LLP. The inspection included a review of remedial actions taken by PWCA to address previously reported deficiencies. Additionally, three audit engagements for the year ending 31 March 2023, were examined.
As part of the review of remedial actions, PWCA was advised to update its Independence Policy Manual by incorporating clear measures to eliminate any ambiguity and prevent unintentional non-compliance with the statutory framework in India.
The inspection further revealed that the audit firm did not adequately perform arm’s length testing of related party transactions and there were deficiencies in maintaining sufficient documentation, demonstrating a comparative analysis with similar transactions conducted with unrelated parties, as mandated by Ind AS 24.
(ii) M/s BSR & Co. LLP:
NFRA conducted audit quality inspections of M/s BSR & Co. LLP. The inspection included a review of remedial actions taken by BSR to address previously reported deficiencies. Additionally, two audit engagements for the year ending 31 March 2023, and one audit engagement for the year ending 31 March 2022, were examined.
As part of the review of remedial actions, BSR was advised to review its Independence Policy in order to comply with Section 144 of the Act in respect of KPMG entities providing non-audit services to overseas subsidiaries of Indian companies.
(iii) M/s Lodha & Co. LLP:
NFRA conducted audit quality inspections of M/s Lodha & Co. LLP. The inspection included a review of the quality control policy of the Firm and five audit engagements for the year ending 31 March 2023, were examined.
As part of the review, the Firm was advised to review its forms and checklists for personnel independence declarations to include updated definitions as per Companies Act 2013 and the same forms and checklists be applied across all its branches. They were also advised to strengthen their policy on audit documentation, consultations and monitoring. They were further advised to review and strengthen policy on confidentiality of electronic data that are obtained in electronic form and stored in electronic devices, cloud storage and email folders of Engagement Team members.
In the audit engagements reviewed, deficiencies were identified in four audit engagements across all audit areas.
(iv) Deloitte Haskins & Sells LLP:
As part of the review of remedial actions, NFRA noted that the definition of PIEs as defined in the audit firm’s voluntarily adopted Non-Audit Service (NAS) guidelines is different from Rule 3 of the NFRA Rules, 2018. The audit firm submitted to bring it in conformity with the Rules.
The inspection further revealed that the audit firm in some selected audit engagements did not perform sufficient appropriate audit procedures for the verification of related party transactions being on arm’s length basis and there was inadequate evaluation of competence, capability, objectivity and work of the auditor’s expert as per the requirements of SA 620.
(v) M/s Walker Chandiok & Co LLP :
NFRA conducted an audit quality inspection of M/s Walker Chandiok & Co LLP (WCCL). The inspection included a review of the remedial action taken by WCCL to address previously reported deficiencies. Additionally, three audit engagements for the year ending 31 March 2023, were examined.
The inspection concluded that in the absence of any clear recognition by WCCL that all the network entities of GTIL of which they are a part, are needed to be considered while determining the compliance with the independence requirements, there is no assurance that WCCL complies with the independence requirements of the Companies Act 2013, the Code of Ethics and SQC1. The Firm should ensure full compliance with Section 144 of the Companies Act, 2013.
The inspection further revealed that WCCL did not adequately perform arm’s length testing of related party transactions and audit procedures for ICFR -revenue. The firm’s audit documentation for related party transactions and impairment of non-financial assets, declaration on personal independence and EQCR’s sign off was also inadequate.
(vi) M/s MSKA & Associates:
NFRA conducted audit quality inspections of M/s MSKA & Associates. The inspection included review of SQC 1 and five audit engagements for the year ending 31 March 2023.
As a result of inspection, the audit firm informed that its network entities will not provide non-audit services to its audit clients. This will enhance independence of auditor and the audit quality. In addition, the audit firm agreed to strengthen its quality control policy/procedure in the areas of Leadership Responsibilities for Quality within the firm, clients acceptance and continuation, maintenance of audit work papers, related party transactions, ICFR revenue and impairment of non-financial assets.
(vii) M/s SRBC & Co. LLP :
NFRA conducted audit quality inspections of M/ SRBC & Co. LLP. The inspection included a review of remedial actions taken by the audit firm addressing previously reported deficiencies. Additionally, three audit engagements for the year ending 31 March 2023, were examined.
As a result of inspection, the audit firm decided that its network entities will not provide non-audit services (subject to some exceptions) to its audit clients. This will enhance independence of auditor and the audit quality.
In addition, the audit firm agreed to strengthen its quality control policy/procedure in the areas of leadership Responsibilities for Quality within the firm, engagement quality control review, maintenance of audit work papers, related party transactions, and ICFR revenue.
3. Circulars and Advisories
One of the important roles and responsibility of NFRA as an independent regulator is to protect the public interest and the interest of investors, creditors etc., by exercising effective oversight of accounting and auditing functions performed by companies and their auditors, respectively. During the course of its various monitoring and investigation activities, it was decided to issue circulars to reiterate provisions of law and standards in areas where non-compliance of the standards and/or laws and rules was observed across cases. Accordingly, circulars were issued with a view to prevent recurrence of such non-compliances and bring in systemic improvement in the quality of financial reporting in India, towards advising and guiding various stakeholders.
During the year, NFRA issued a circular dated 03 October 2024 in respect of ‘Responsibilities of Principal Auditor and Other Auditors in Group Audits’: In the course of performing its functions such as exercising oversight and monitoring and enforcing compliance, NFRA has observed gross negligence and audit failure in audits of Group Financial Statements (cases of Group Audits involving various companies). Instances include Reliance Capital Limited, Reliance Home Finance Limited, Reliance Commercial Finance Limited, Coffee Day Enterprises Limited, Dewan Housing and Finance Limited, and audit quality review of IL&FS. In the cases dealt with by NFRA, moneys had been diverted through subsidiaries and associates. The Principal Auditors did not raise red flags at the right time despite indicators of fraud, going concern
issues and diversion of funds, as they relied on fallacious interpretations of Auditing Standards to not go into these issues, and instead completely relied upon the clean audit reports of the Component Auditors.
The combined effect of these have resulted in a loss of tens of thousands of crores in the financial and capital market, adversely impacting investors, including retail investors, and creditors, involving huge public interest. Therefore, in exercise of NFRA’s powers under Section 132 (2) (b), (c), (d) of the Companies Act, 2013 read with Rule 4 (1), 4 (2) (e) and Rules 3, 4 and 9 of NFRA Rules 2018, the auditors’ obligations under the Companies Act 2013 and existing requirements in SA 600 and related standards, were reiterated in this circular, so that interpretations of the provisions of SA 600 by the auditors remain consistent with their obligations under the Companies Act 2013, Standard on Quality Control and other applicable Standards of Auditing.
4. Professional Standards recommended for notification
Subsection 2(a) of section 132 of Companies Act 2013 prescribes that NFRA shall make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be. During the year, the Authority held a total of 6 meetings where important issues were deliberated and proposals were drafted to be sent to MCA for notification.
Rule 4(1) of NFRA Rules 2018 requires NFRA to establish high quality auditing and accounting standards towards protecting public interest and the interest of the investors & creditors. The existence of high-quality standards in line with contemporary global best standards and practices is a sine qua non for effective role of Independent Regulators.
NFRA’s recommendation to MCA on Auditing Standards for Companies
During the current year, NFRA laid emphasis on formulation of high-quality Auditing Standards including Audit Quality Management Standards. Section 143 (10) of the Companies Act 2013 ushered in a paradigm shift in the standard-setting framework in the area of audit of companies, whereby the standard-setting became part of the law, including evaluation and recommendation of the auditing standards by the Authority.
NFRA undertook a comprehensive review of the existing standards and framework vis-à-vis the prevailinginternational audit and assurance standards issued bythe International Auditand Assurance Standards Board (IAASB). It was observed that the current Standards on Auditing (SAs) and the highly interrelated Standards on Quality Control of Audit needed alignment with the contemporary audit and assurance standards framework of the IAASB. Accordingly, the Authority undertook a suitable review of the auditing and audit quality management standards vis-à-vis global practices and suitably incorporated global best practices and standards. In respect of a critical deficiency in the audit standard on group audits viz. SA 600, the Authority undertook public consultation by issuing exposure draft of the revised SA 600, outreach meetings with stakeholders, before its finalising its recommendations on the revised SA 600.
The Authority deliberated the standards in its meetings held on 15 May 2024, 26 August 2024 and 11 & 12 November 2024. Based on these deliberations, the Authority finalised a set of 40 standards comprising 35 standards on auditing, 3 standards on auditing in specialised areas and 2 standards on audit quality management. Subsequently, in December 2024, the Authority recommended a set of 40 Standards to the Ministry of Corporate Affairs (MCA) for consideration of notification under Section 143 (10) of the Companies Act 2013.
Indian Accounting Standards (Ind ASs)
Ind ASs, substantially converged with high-quality globally accepted IFRS Accounting Standards, occupy a strategic role in enabling level playing to the Indian Corporates to attract global capital and compete globally. The Authority also recognises the compliance with Ind ASs as an important regulatory tool to protect the interest of investors and other creditors with a stake in the quality and comparability of financial statements of corporates. In this context, the Authority continued to evaluate the proposals of the ICAI to remain converged with IFRS Accounting Standards and during 2024-25, considered the following two proposals of the ICAI and recommended the same to MCA for issuing notification u/s 133 of the Companies Act 2013 to amend the Companies (Indian Accounting Standards) Rule 2015.
♦ Ind AS 12, Income Taxes – Amendment ‘International Tax Reform- Pillar Two Model Rules’
♦ Ind AS 21, The Effects of Changes in Foreign Exchange Rates- Amendment ‘Lack of Exchangeability’ Accounting Standards for non-Ind AS Companies
Accounting Standards applicable to non-Ind AS Companies are prescribed under the Companies (Accounting Standards) Rule 2021 read with Section 133 of the Companies Act 2013. During the year 2024-25, the Authority considered and accepted the ICAI proposal to amend AS 22, Accounting for Taxes on Income in line with Ind AS 12 to address the matter of proposed International Tax Reform called Pillar Two Model Rules.
Limited Liability Partnerships (LLPs)
Consequent to amendment in Section 34 of Limited Liability Partnerships Act 2008, the standards of accounting and standards of auditing may be prescribed by the Central Government in consultation with the NFRA as recommended by the ICAI. NFRA undertook study of accounting and auditing framework for LLPs in a few developed economies. During the year 2024-25, the Authority completed its task of evaluating the proposals of the ICAI and recommended the results of its review to the Ministry of Corporate Affairs.
Source: NFRA Annual Report 2024-25
