Cabinet approves new body to regulate auditing : NFRA
Cabinet finally approves new body to regulate auditing and accounting in INDIA NFRA (National Financial Reporting Authority). On 1st March 2018, Finance Minister Arun Jaitley said that the government of India has also decided to set up an independent body NFRA (National Financial Reporting Authority) to pause big scams and avoid current like situations in future. For the purpose the government will soon amend the Companies Act 2013.
It would act as a watchdog for auditing and accounting profession and once set up, the current powers of the ICAI to act against defaulter chartered accountants will be transferred to the new regulator. This will be huge blow to the ICAI, who is till now the supreme power to deal with such situations. The current decision of government comes in situation when big bank frauds comes in lime light and role of auditors are also in question
Jaitley who was briefing the media said that once the FEO Bill becomes an act it will deal with only large cases of economic offences in which Rs 100 crore or more money was involved in a fraud. He also said that the setting up of NFRA was a follow-up exercise of the announcements he made in the Union Budget 2017-18 about the same.
As per Sec. 132 of the Companies Act, 2013, NFRA will have powers to impose less than INR one lakh fine and the amount of that can be extend up to 5 times of the fees received in case of individuals. For firms, the minimum penalty would be INR ten lakh and could go up to 10 times of the fees received, according to the Companies Act.
The Institute of Chartered Accountants of India (ICAI) has not been in favour of setting up of the NFRA for obvious reasons. Tell us your views about setting up NFRA in commments below.