National financial reporting authority to be formed to discipline errant auditors

The Union Cabinet today approved the establishment of a National Financial Reporting Authority - a new agency to regulate and discipline auditors."Jurisdiction of NFRA for investigation of Chartered Accountants & their firms under Section 132 of the Act would extend to listed companiesand large unlisted public companies, the thresholds for which shall be provided in the Rules," Finance Minister Arun Jaitley said.NFRA will act as an independent regulator for the auditing profession which was one of the key changes brought in by the Companies Act, 2013, Jaitley added.Since last summer, the government has been pushing for a clean-up of the audit profession with Prime Minister Narendra Modi highlighting the poor disciplinary record of CAs in a July statement.Modi had said only around 25 auditors had faced action in over a decade and around 1,400 cases were pending, numbers that ICAI had contested.Subsequently, the MCA moved the cabinet for setting up NFRA but a decision was kept pending although the finance ministry also talked about the plan in a press release on crackdown against errant companies, including shell companies.The PNB scam, where frauds adding up to almost Rs 12,600 crore went undetected for over six years, has spurred the government into reconsidering the move, said sources.

from The Economic Times http://ift.tt/2F57CdM