The Central Government has notified the constitution of the National financial Reporting Authority ( NFRA ), a new regulatory for the auditors in the country.
As per a notification issued by the Ministry of Corporate Affairs (MCA) last day, the Government appointed the 1st October, 2018 as the date of constitution of National Financial Reporting Authority.
In a separate notification, the Central Government has said that the provisions of sub-sections (1) and (12) of Section 132 of the Companies Act, 2013 shall come into force with effect from 1st October, 2018.
As per section 132(1) of the Act, the Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act.
As per the Act, the National Financial Reporting Authority shall— (a) 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; (b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed; (c) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed; and (d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.
Under section 132 (2) of the Act, the Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed.
A few days ago, Former IAS officer Rangachari Sridharan was Friday appointed as first chief of NFRA.
In March, the Union Cabinet had approved the National Financial Regulatory Authority and clarified that the provision will initially apply to all listed companies and unlisted large companies.
For others, the existing disciplinary mechanism under the Institute of Chartered Accountants of India (ICAI) will continue. Amended rules in this regard will notify later, Jaitley said in March.
Against the implementation of the NFRA, several petitions are filed before the madras and Delhi High Courts.
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