National financial
reporting authority (NFRA), is an independent regulatory for auditing
profession, one of the key changes brought in by the companies act, 2013.
Standing committee on finance recommended to include this provision in the
companies act 2013.
Need for
establishing NFRA:
- In the wake of accounting scams like Bernie Modoff scandal, Satyam scandal etc., (PNB scam).
- To establish an independent Regulator.
- For enforcement of auditing standards.
- To ensure that the quality of audits done in accordance with auditing standards.
- To strengthen the independent of audit firms.
- To enhance investor and public confidence in financial disclosure of companies.
Impact of NFRA:
- It results in improved foreign or domestic investments.
- Enhancement of economic growth.
- Supporting the globalisation of business by meeting International practices.
- It assists in further development of audit profession.
- In India, establishing NFRA is a welcoming step as the most of the major economics of the world have independent audit regulations.
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