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Will NFRA be bloodhounds for Chartered accountant firm in India?

Will NFRA be bloodhounds for Chartered accountant firm in India? Back

Will NFRA be bloodhounds for Chartered accountant firm in India?

The National Financial Reporting Authority (NFRA) is a reaction to the increasing number of scams within the country. It is one of the key change in India brought in the Companies Act, 2013, under subsection 2 of section 132. It is an independent regulatory institute for Chartered Accountant firms in India.

The duties of the institution as per the Companies Act, 2013 are as follows:

   A suggestion of accounting and auditing policies and standards. They ought to be adopted by all companies to receive a green flag from the government.

   Be a watchdog and mandate docility with the setup standards of accounting and auditing.

   Supervise the quality of assistance of the businesses such as the Chartered accountant firms in India to ensure agreement with the norms. The suggestion of measures for enhancement in the quality of service is also a part of the organization's duty.

   Conduct other functions, which would be vital to enforce the responsibilities mentioned before.

Will NFRA be bloodhounds for Chartered accountant firm in India?

All these regulatory duties of NFRA directly affects chartered accountant firms in Delhi NCR and other states of India in three significant ways.

These are:
 

   All these duties aim at maintaining high standards of auditing and accounting by practicing supervision upon companies or organizations such as auditing firms in India. This is to protect the interests of stakeholders such as investors, bankers, corporates, etc. and prevent any future scams as money laundering is a common allegation imposed upon. As the new rules and regulations would be strictly implemented, scope of manipulation of data would be less.

   With NFRA, the Chartered accountants both in the role of a CFO of the company or as an auditor, would be under greater fear of being reprimanded deterring any misreporting of financials by them. This is because, the Companies Act 2013, grants National Financial Reporting authority the right and power to hold the firms and chartered accountants legally responsible for any inconsistencies. Potential debarment and imposition of enormous penalties would eventually keep the chartered accountants and auditory firms in India under strict check. Additionally, due to the former unsystematic arrangements, the truth behind allegations of money laundering was often hard to unveil. Now, with NFRA scams would be easier to identify.

   NFRA can also freely assess and scrutinize any chartered account firm in Delhi NCR or other parts of the country for proposing changes or recommendations to chartered accountants in practice who act as auditors for a higher quality work. These suggestions are ought to be adhered to by the chartered accountants. This intervention might eventually increase the work load of CAs and often delay their work.