Basic points of NFRA & ITS coverage

Basic points of NFRA & ITS coverage

The NFRA & ITS Coverage has been discussed in the article. The basic questions are also bieng answered in the article regarding the NFRA & ITS.

Companies Covered By NFRA

The Authority shall have power to monitor and enforce compliance with accounting standards and auditing standards, oversee the quality of service or undertake investigation of the auditors of the following class of companies and bodies corporate, namely:-

👉All Listed Companies/ Listed Body Corporate;

👉Unlisted Companies

~Where Paid up Capital is Rs. 500 Cr. or More;
OR
~Turnover is Rs. 1000 Cr. or More;
OR
~AGGREGATE of Outstanding Loan, Debentures and Deposit is
500 Cr. or More.

~Above Limits shall be check on as on the 31st March of immediately preceding financial year;

👉All Banks/ Insurance/ Electricity Companies;

👉Any Company or Person (Auditor), on a reference made to the Authority by the Central Government in public interest;

👉Foreign Subsidiary/Associate company of Any Indian company as mentioned above if Income/Net worth of such Foreign Subsidiary/Associate company exceeds 20% of consolidated Income/Net worth of Above mentioned Indian companies.

Compliances :

A. Every existing body corporate other than a company governed by these rules, shall inform the Authority within thirty days of the commencement of these rules, in Form NFRA-1, the particulars of the auditor as on the date of commencement of these rules.

B.Once a Company falls under the above limits under NFRA, will be covered by NFRA for 3 More years EVEN IF LIMITS ARE REDUCED/ LISTED STATUS CHANGES LATER ON.

C.Every Body Corporate other then Company as defined u/s 2(20) formed in India and governed under this rule shall, within fifteen days of appointment of an auditor under sub-section (1) of section 139, inform the Authority in Form NFRA-1, the particulars of the auditor appointed by such body corporate.

Functions Of NFRA

👉Maintain details of particulars of auditors appointed in the companies and bodies corporate specified in rule 3;

👉Recommend accounting standards and auditing standards for approval by the Central Government;

👉Monitor and enforce 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 for improvement in the quality of service;

👉Promote awareness in relation to the compliance of accounting standards and auditing standards;

👉Co-operate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards; and

👉Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.

Filing Of Annual Return By Auditor

Every auditor referred above shall file a return with the Authority on or before 30th April every year in such form as may be specified by the Central Government.

Punishment In Case Of Non-Compliance

👉If a company or any officer of a company or an auditor or any other person contravenes any of the provisions of these rules, the company and every officer of the company who is in default or the auditor or such other person shall be punishable as per the provisions of section 450 of the Act.

Monitoring And Regulating Powers Recommend Central Govt.

👉w.r.t. AS and SAs and checking the proper compliance for the same, oversee the quality of audit and audit firms.

Investigating And Summoning Powers

👉Investigation of audit firms, summoning and enforcing attendance, Inspection of records etc.

CA Amresh Vashisht
Meerut