NFRA is a body proposed in Companies Act 2013 for the establishment and enforcement of accounting and auditing standards and oversight of work of auditors. Its establishment has been recently approved by Union Cabinet.
Reasons for establishment of NFRA :
- ICAI has been found to be not upto the mark with regards to its regulatory functions.
- Several other loopholes exist in regulating auditors, as exposed by several of recent corporate scams.
Major Power and Functions :
- Would formulate rules and regulations that would govern audit sector.
- Would have ability to investigate, impose fines and ban auditors and auditing firms.
- Would reform audit sector of country.
- Would promote international best practices in India.
- Would lessen corporate scams involving auditors.
- Would promote healthy corporate environment.
- Would assist in better investigation and delivery of justice and resolve corporate conflicts.