As we all know, ICAI , so far is a self-regulatory body, has had the monopoly on training and qualifying chartered accountants, regulating and giving them license to practice and including scrutinising quality of the audit performed by them.
And Now Central Government approved the constitution of National Financial Reporting Authority (NFRA), as per section 132 of Companies Act 2013 as announced on 1st March 2018 for regulating aspects related to accounting and auditing.
As per the Companies Act, 2013 the NFRA is tasked with the job of recommending accounting and auditing standards, ensuring compliance with them and overseeing the quality of service of the accounting and audit professions.
“NFRA is not meant to replace the disciplinary jurisdiction of the ICAI. Therefore in all the routine cases, which will be the bulk of cases, the ICAI will perform its function.”
— Finance Minister Arun Jaitley
Our Finance Minister Mr. Jaitley said that The ICAI will continue to exercise these powers over small companies.
The jurisdiction of the NFRA , which would be an oversight body for auditors, will extend to all listed companies as well as large unlisted public companies. The thresholds would be prescribed in the rules.
It has also been given the power to investigate matters of professional misconduct by chartered accountants or CA firms, impose penalty and debar the CA or firm for up to 10 years.NFRA will have powers to impose less than Rs 1 lakh fine and the amount can extend up to five times of the fees received in case of individuals.
The regulator will have 15 members,
By this decision many functions of ICAI would now be replicated by NFRA.