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National Financial Reporting Authority (NFRA): Standalone Legislation

National Financial Reporting Authority (NFRA):

National Financial Reporting Authority (NFRA) Chairperson has pitched for a ‘standalone legislation’ for the regulator in the interests of autonomy.

  • He also demanded that all necessary penal provisions relating to financial reporting should be consolidated and vested with it.
  • Currently, the NFRA may take action against auditors for professional misconduct but when it came to other functionaries of a company who have the responsibility for financial reporting, penal powers continue to be vested with the Centre.
  • A standalone legislation will allow for integrated regulation of all participants in the financial reporting system.
  • National Financial Reporting Authority (NFRA) was constituted on 1st October, 2018 under section 132 (1) of the Companies Act, 2013.
  • In the wake of accounting scams, a need was felt to establish an independent regulator for enforcement of auditing standards and ensuring the quality of audits so as to enhance investor and public confidence in financial disclosures of companies.

Composition:

  • The Companies Act requires the NFRA to have a chairperson who will be appointed by the Central Government and a maximum of 15 members.

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