NFRA will monitor Following Companies –
(i) ALL Listed Companies/ Body Corporates
(ii) Unlisted Companies with Paid up Capital or Loans > = INR 500 crores OR Turnover > = INR 1000 crores
(iii) ALL Banks/Insurance/Electricity Companies.
(iv) Certain specific foreign Subsidiaries/Associates of Indian Companies.
i. For auditor of these Companies, ICAI do not have any investigation role.
ii. COMPANY/AUDITOR ONCE GOVERNED BY NFRA WILL BE COVERED BY NFRA for 3 MORE YEARS EVEN IF LIMITS ARE REDUCED/ LISTED STATUS CHANGES. !!!
iii. For Other Companies, ICAI will have the power to initiate disciplinary proceedings.
i. Notifying Accounting Standards & Auditing Standards –
“ICAI Recommend —— NFRA will check —— Recommend CG for Notifying it”
ii. Monitoring Compliance of AS –
For AS compliance, NFRA may review FS of such Companies and ask for further Information, seek additional information, initiate for penal proceeding if any wrongdoing.
iii. Monitoring Compliance of SA –
For SA Compliance, NFRA may review Auditor Working papers, check Sufficiency of Quality System within the Audit Firm, Supervise or Test the audit.
Note – Means for Big Companies, Peer Reviewing Powers are now with NFRA and not with ICAI.
i. Monitoring and Regulating Powers –
Recommend CG w.r.t. AS and SAs and checking proper compliance of the same, oversee quality of audit firms.
ii. Investigating and Summoning Powers –
Investigation of audit firms, summoning and enforcing attendance, Inspection of records.
iii. Penalizing Powers –
Individual Auditors (INR 1 Lakh to 5 times of Fees), Firm of Auditors (INR 5 Lakhs to 10 times of Fees).
iv. Debarring Powers
Debarring from Practice as a member of ICAI for a period of 6 months to 10 years.
Contributed by: CA Bipin Kumar Jha, CA Yogesh Raheja
Also Read-National Financial Reporting Authority (NFRA) Rules, 2018
According to Rule 3(2) every existing company shall inform the Authority within 30 days in Form NFRA -1, the particulars of the auditor appointed by such body corporate. Does it mean that every privatelimited company, irrespective of the amount of capital or turnover, or outstanding loan, is required to file Form NFRA – 1?