The Union Cabinet ministry hosted by the Prime Minister of India Narendra Modi has been approved the establishment regarding National Financial Reporting Authority (NFRA) and also ordered to create a post for one Chairperson and secretary. Apart from this, there is also a provision of three other post which includes a post on enforcement, auditing, and accounting. In the previous, there was one national advisory committee on accounting standards (NACAS) which formulates and Regulate accounting standards in India but now it’s changed to National Financial Reporting Authority under company act. NFRA is the watchdog of Central Govt to monitor, measure, regulate and implement the accounting standards and auditing policies.
Due to financial scam and frauds in India companies Govt of India took this action to regulate and to control the accounting and auditing system accounting to proper standards and policies. To ensure the quality and strengthened the auditing norms. It will help to boost investors and foreign investments with full of confidence. NFR also play a role of a judicial body to Regulate, Control and even punish. It is the independent authority created by Central Govt. basically to stop financial scams in India.
Objectives
- Regulate Accounting and auditing.
- Ensure right monitoring and implementation of Standards and Policies.
- Check the accounting system and to ensure transparency.
- Focus on global investment monitoring.
- To put a sharp eye on auditors and firms.
Importance and Significance
- NFRA improved Foreign and Domestic investment in the nation.
- It will provide benefit to the economic growth of the country.
- It will reduce scams and financial scam.
- NRFA also encourage the global investors.
- it helps in the development of auditing professionals.
- It will create a transparent financial system to ensure stability and confidence in investors.
NFRA provision under Companies Act, 2013
Under Section 132 of Indian Company Act, 2013 it will provide authority of NFRA for reporting of auditors, accounts of firms or companies
Composition of NFRA
- Chairman-one
- The total membership of 15 people.
- Accounting Member-one
- Auditing member-one
- Enforcement member-one
- Joint secretary-one
Powers and Functions of NFRA
- NFRA investigates the matter of Companies misconduct in accounting chapter.
- It recommends and formulates of accounting standards and policies accepted by the companies.
- It will implement and monitor the accounting standards.
- To check the measures and also help in improving the policies and accounting standard.
- NFRA also a power of jurisdiction like civil suits.
- It also plays the role of watchdog for the accounting dept. in the companies.
- There is also a provision of penalty for the defaulter.
Conclusion
NFRA play an important role to provide transparency in the field of Auditing, accounting as well as financial reporting NFRA regulates accounting bodies and policies to safeguard the accounting reporting system.