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