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September 4, 2019

NFRA to emulate PCAOB to boost audit transparency in India

Authorities in India are increasing their efforts to improve audit transparency. The latest move will see auditors overseen by the National Financial Reporting Authority (NFRA) being required to disclose their findings separately, reports Economic Times.

The NFRA itself is a relatively new creation, being created by cabinet decree issued in March 2018 and becoming operational in October last year. The NFRA was set up to be an independent regulator for the auditing profession, one of the key changes brought in by the Companies Act, 2013.

The jurisdiction of NFRA for investigation of chartered accountants and their firms under section 132 of the Act extends to listed companies and large unlisted public companies with a paid-up capital of INR 5bn or more, or a turnover of INR 10bn or more, or loans, debentures and deposits of INR 5bn or more, as well as public interest entities in banking, insurance and power.

The latest proposal would see the institution of disclosure forms for adverse comments and observations similar to those required in the US by the Public Company Accounting Oversight Board.

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