Modi-led Union Cabinet has given its nod to establish National Financial Reporting Authority and creation f one post of Chairperson, three posts of full-time Members and one post of Secretary for NFRA.
Aim
National Financial Reporting Authority or NFRA will act as an independent regulator for the auditing profession which is one of the key changes brought in by the Companies Act, 2013. The inclusion of the provision in the Act was on the specific recommendations of the Standing Committee on Finance. As a result of this, foreign/domestic investments will be improved, economic growth will be enhanced. It will also support the globalisation of business by meeting international practices, and assist in further development of audit profession.
Background
In the wake of accounting scam, the need for constituting NFRA arouse and felt. It was required to form a regulatory authority that works independently and enforce the auditing standards and to ensure the quality of auditing to strengthen the independence of audit firms. Therefore, enhance investor and public confidence in financial disclosures of companies.
Expected Questions
The cabinet has approved the establishment of which of the following authorities to act as an independent regulator for the auditing profession?
a. National Financial Reporting Authority
b. National Centralised Auditing Authority
c. National Financial Regulatory Authority
d. National Certified Financial Auditors Authority
