Company Law

National Financial Reporting Authority [S. 132]

1.

NFRA Constituted

Effective 1-Oct-2018

2.

Composition of NFRA
[S. 132(3)]
  • Chairperson : a person of eminence and having expertise in accountancy, auditing, finance or law appointed by CG
  • other members : not > 15 consisting of part-time and full-time members

    Chairperson and members in full-time employment with NFRA shall not be associated with any audit firm (including related consultancy firms)

    • during the course of their appointment, and
    • 2 years after ceasing to hold such appointment

3.

Functions/responsibilities of NFRA [S. 132(2)]
  • make recommendations to CG on the formulation and laying down of accounting and auditing policies and standards for adoption by Cos/class of Cos/their auditors, as the case may be;
  • monitor and enforce the compliance with accounting standards and auditing standards;
  • 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
  • perform such other functions relating to the above as may be prescribed

4.

Powers of NFRA
[S. 132(4)]
  • to investigate, either suo moto or on a reference made to it by CG, into the matters of professional or other misconduct committed by any member or firm of CA registered under ICAI
    • ICAI/others cannot initiate/continue any proceedings where NFRA has initiated an investigation u/s 132;
  • same powers as are vested in a civil court under the Code of Civil Procedure 1908 while trying a suit, in respect of:–
    • discovery and production of books of account and other documents, at such place and at such time as may be specified by NFRA;
    • summoning and enforcing the attendance of persons and examining them on oath;
    • inspection of any books, registers and other documents of any person referred to earlier at any place;
    • issuing commissions for examination of witnesses or documents;
  • where professional or other misconduct is proved, have the power to make order for–
    • imposing penalty–
      • in case of individuals ⟶ not < ₹ 1 lakh, but which may extend to 5 times of the fees received; and
      • in case of firms ⟶ not < ₹ 5 lakh, but which may extend to 10 times of the fees received
    • 17debarring the member or the firm from engaging himself or itself from practice as member of ICAI for
      • minimum 6 months,
      • maximum 10 years