The National Financial Reporting Authority ( NFRA ), the new
regulatory would take stern action against the chartered accountants who
sign the balance sheets without proper checking.
This body will essentially monitor the accounting and auditing standards and also take disciplinary
action.
The Ministry of Corporate Affairs notified a set of rules and responsibilities for NFRA on November 14 confirmed this.
CAs who work with big firms will now have to follow the new set of
rules, including time-bound detailed disciplinary proceedings. They also
have to settle show cause notices within 90 days with a summary.
“ICAI has almost failed to take any disciplinary action against
accused CAs who are involved in fraudulent activities and bypassed
auditing rules. These will now come under NFRA,” an official of Ministry
of Corporate Affairs told DNA.
Government nominee on the council of
ICAI
and tax consultant, Ravi Gupta, said that honest CAs should not worry
about the new set of rules. “Those performing their duties in a proper
manner would not be impacted at all. Action will come into play only
when fraud occurs since NFRA will have the power to initiate
disciplinary proceedings.”
Gupta further added that the only large firm audits will be covered
under the new set of rules. “The other function will remain with ICAI.”
According to the Ministry of Corporate Affairs, NFRA will maintain
all the details of auditors appointed in companies and other bodies. The
new regulatory agency will recommend accounting standards and auditing
standards for approval by the government and also co-operate with
national and international organisations.
The Rules notified last week also mandated auditors to file I-T returns with the Authority on or before April 30 of every year.
NFRA officials have the power to investigate any matter on the basis
of its compliance or oversight activities. They can take suo moto call
for an investigation into any case of professional or other misconduct.
NFRA officials also have the right to summon company officials and its
auditor for the explanation.