{"id":12914,"date":"2021-09-14T00:00:00","date_gmt":"2021-09-14T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/14-09-2021\/national-financial-reporting-authority-nfra-2\/"},"modified":"2025-09-24T18:12:16","modified_gmt":"2025-09-24T12:42:16","slug":"national-financial-reporting-authority-nfra-2","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/14-09-2021\/national-financial-reporting-authority-nfra-2","title":{"rendered":"National Financial Reporting Authority (NFRA)"},"content":{"rendered":"<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>In Context\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">T<\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">he National Financial Reporting Authority (NFRA) will set up a single stakeholders\u2019 advisory group and a research cell to support the group.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>Need for setting NFRA<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">The decision to constitute NFRA was taken after the role of auditors and the Institute of Chartered Accountants of India came under the scanner for <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>alleged lapses<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> in various <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>corporate scams<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> including that at the Punjab National Bank.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">So, it acts as an <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>audit regulator.<\/strong><\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>National Financial Reporting Authority(NFRA)<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>About:<\/strong><\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: circle;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>\u00a0NFRA<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> was <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>constituted in 2018<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> by the Government of India under <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>section 132 (1)<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> of the<\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong> Companies Act, 2013.<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Composition<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">:<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: circle;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">The Companies Act requires the NFRA to have a chairperson who will be appointed by the Central Government and a maximum of 15 members.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Functions and Duties:<\/strong><\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: circle;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">As per Sub Section (2) of <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Section 132 of the Companies Act, 2013<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">, the duties of the NFRA are to:<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Aid and advise the Executive Body<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> of the NFRA on issues related to the drafts of accounting and auditing standards.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Provide inputs from the perspectives of users, preparers and auditors of financial statements.<\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>\u00a0<\/strong><\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Recommends accounting and auditing policies<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> and standards to be adopted by companies for approval by the Central Government.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Monitor and enforce compliance with accounting standards and auditing standards.<\/strong><\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Oversee the quality of service of the professions associated with ensuring compliance with such standards.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Protect the <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>public interest.<\/strong><\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Powers:<\/strong><\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: circle;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">It can <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>undertake investigation<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> related to the following class of companies and bodies corporate called Public Interest Entities:<\/span><\/span><\/span>\n<ul>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Companies whose securities are listed on any stock exchange in India or outside India.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Unlisted public companies having paid-up capital of not less than Rs. 500 crores or having an annual turnover of not less than Rs. 1,000 crores or having, in the aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crores as on the 31st March of immediately preceding financial year.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Insurance companies, banking companies, companies engaged in the generation or supply of electricity.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: square;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Where professional or other misconduct is proved, it has the power to make an order for imposing a penalty.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Source: <\/span><\/span><\/span><a style=\"text-decoration: none;\" href=\"https:\/\/www.thehindu.com\/business\/Industry\/nfra-for-single-stakeholders-advisory-body\/article36442035.ece\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #1155cc;\"><u>TH<\/u><\/span><\/span><\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In Context\u00a0 The National Financial Reporting Authority (NFRA) will set up a single stakeholders\u2019 advisory group and a research cell to support the group.\u00a0 Need for setting NFRA The decision to constitute NFRA was taken after the role of auditors and the Institute of Chartered Accountants of India came under the scanner for alleged lapses [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12915,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[30,118,117],"class_list":["post-12914","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","tag-gs-2","tag-regulatory-various-quasi-judicial-bodies","tag-statutory"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/3014950Screenshot.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/12914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=12914"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/12914\/revisions"}],"predecessor-version":[{"id":55037,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/12914\/revisions\/55037"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/12915"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=12914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=12914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=12914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}