NFRA is Unconstitutional, says ICAI Chief

NFRA - draft procedure - audit files - Taxscan

The President of the Institute of Chartered Accountants of India (ICAI), CA Naveen N D Gupta told to the medias that the new regulatory for auditors, i.e, the National Financial Reporting Authority ( NFRA ) is not legally valid, Times of India reported.

The Institute chief reportedly said that the NFRA is not in line with the current regulations and suggested that the task should be left to the self-regulating body.

“We are willing to implement any reform. We have been honestly discharging our duties under supervision by the government and with government nominees being integral part of the disciplinary process,” ICAI president Naveen Gupta told reporters on Monday.

Recently, the Central Government has constituted NFRA allegedly due to the poor track record at disciplining errant auditors by the ICAI. The provision incorporated in the Companies Act, 2013 finally rolled out after five years.

The constitutional validity of the NFRA is under challenge before the Madras and delhi High Courts.

In a recent order, the Delhi High court had stayed the proceedings of NFRA.

ICAI, which had so far refrained from sharing data on disciplinary actions, released numbers on Monday to suggest that the pace had picked up in 2017-18 and it would have been maintained but government’s decision to appoint Rangachari Sridharan, its nominee on disciplinary committee as the first NFRA chief, has slowed down the run rate.

While around 1,300 cases were currently pending disciplinary action, including 135 complaints filed by government agencies, Gupta said the speed has picked up in recent years. “We have been fastest in taking action, acknowledging what’s happening and most of the times, acting suo motu,” he said, adding that cases, that were pending for nearly 15 years, have also been decided. The government is, however, not fully satisfied with the agency’s response and is cut up with it for trying to scuttle the establishment of NFRA.

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