NFRA to Inspect Audits of 35 - 40 Companies in FY 26
NFRA will inspect audits of 35-40 companies in FY26 as part of its annual review to strengthen audit quality and oversight.
India’s audit regulator, the National Financial Reporting Authority (NFRA) will review more company financial statements this year as part of its annual inspection of audit firms, according to two people aware of the matter. According to Mint, the authority is expected to examine financial statements of around 35-40 companies for the fiscal year ending 31 March. Last year,...
India’s audit regulator, the National Financial Reporting Authority (NFRA) will review more company financial statements this year as part of its annual inspection of audit firms, according to two people aware of the matter.
According to Mint, the authority is expected to examine financial statements of around 35-40 companies for the fiscal year ending 31 March. Last year, it covered 25 companies. The people spoke on condition of anonymity.
The inspection reports will be released before the end of March. These reports will highlight deficiencies and areas where auditors need improvement. The names of the companies will not be disclosed, following global practice.
These reports are not disciplinary orders. They are mainly a review of how the audits were done and act as guidance for the audit industry. The increase in the number of companies being reviewed comes at a time when NFRA has also stepped up inspections of audit firms this fiscal year.
Mint had reported on 26 January that in FY26, the watchdog will complete inspections of the top 10 audit firms. This is the highest number of inspections done by the regulator in its eight-year history.
The inspections will cover areas such as quality control at audit firms, revenue recognition, and engagement-specific issues. High-risk areas like related party transactions and impairment of non-financial assets are also being examined closely.
Prateek Agarwal, partner - audit & assurance at Nangia & Co LLP, said these inspections are very important. He said they help auditors understand the expectations of regulators and other stakeholders. He added that continuous efforts by NFRA and the Institute of Chartered Accountants of India are helping to improve audit quality and align with global standards.
A spokesperson for Walker Chandiok & Co LLP said the firm is committed to audit quality and welcomes suggestions from NFRA to enhance public trust.
Vishal Divadkar, managing partner and head - audit & assurance at MSKA & Associates, said wider inspection coverage could gradually improve baseline audit quality. He said areas like related parties, impairment and revenue require deep judgement and evidence-based checks.
He also said that with a large number of public interest entities and growing capital market activity, broader inspection will strengthen confidence among domestic and global investors.
For audit firms, inspections create what he called a constructive feedback loop. Wider coverage means firms may need to refine audit methodologies, improve training, and invest more in strong internal quality systems.
Over time, this can improve financial reporting and governance, consistent with NFRA’s objective of protecting public and investor interest.
In FY25, NFRA inspections covered FY23 financial statements of 25 companies. These included companies audited by MSKA & Associates, Price Waterhouse Chartered Accountants LLP, Price Waterhouse & Co Chartered Accountants LLP, SRBC & Co. LLP, and others.
Queries sent to NFRA and some audit firms did not receive response till press time. The inspection reports are mainly a critique of the audit process and are not disciplinary actions.
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