Shrikant (Associate) 04 December 2018
About NFRA and related compliance
National Financial Reporting Authority (NFRA) has been established by government from March 1, 2018 under the Companies Act, 2013. Further, Ministry of Corporate Affairs also notified the National Financial Reporting Authority Rules, 2018 (NFRA Rules) which came into force from November 13, 2018. Form NFRA-1 form has been prescribed under the NFRA Rules, 2018 which came into force from November 13, 2018 which is required to filed by certain class or classes of companies as prescribed under the NFRA rules.
Functions of the NFRA—
(a) to make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;
(b) to monitor and enforce the compliance with accounting standards and auditing standards
(c) to oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters.
(d) to undertake investigation either suo moto or on a reference made to it by the Central Government, of the following class of companies and bodies corporate in such manner, as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949,
Classes of companies and bodies corporate governed by the NFRA ─
(i) companies whose securities are listed on any stock exchange in India or outside India;
(ii) unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial year;
(iii) insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act for the time being in force or bodies corporate incorporated by the Companies Act, 2013 in accordance with clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 1 of the Companies Act, 2013;
(iv) any body corporate or company or person, or any class of bodies corporate or companies or persons, on a reference made to the NFRA by the Central Government in public interest; and
(v) a body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India as referred to in clauses (a) to (d), if the income or networth of such subsidiary or associate company exceeds twenty per cent. of the consolidated income or consolidated networth of such company or the body corporate, as the case may be, referred to in clauses (i) to (iv).
Every existing body corporate as mentioned above (other than a company) governed by these rules, shall inform the NFRA within thirty days of the commencement of these rules, in Form NFRA-1, the particulars of the auditor as on the date of commencement of these rules.
Every body corporate [as mentioned in clause (v) above], other than a company formed under the present or previous company law, formed in India and governed under this rule shall, within fifteen days of appointment of an auditor under sub-section (1) of section 139, inform the NFRA in Form NFRA-1, the particulars of the auditor appointed by such body corporate.
You may find the extracts of the NFRA Rules in the link mentioned below -
SkDash (CS (Member) CWA (Final)) 12 December 2018
It seems NFRA 1 is not yet released by MCA. I am too waiting for the same. MCA should come up with a notification in this regard.
Khushboo Maheshwari (Company Secretary) 21 December 2018
Does an unlisted public company falling in the above threshold not required to file NFRA 1? They say only body corporate.
SkDash (CS (Member) CWA (Final)) 21 December 2018