NFRA gets approval

"NFRA is not intended to replace the disciplinary jurisdiction of the ICAI.

Bulk of the cases will continue to be under the procedure of the Institute of Chartered Accountants.

The jurisdiction of NFRA for investigation of chartered accountants and their firms would, in the first instance, extend to listed companies and the large ones among unlisted companies,"

 -  FM Jaitley 

The NFRA by the virtue of new company legislation is empowered with various powers like suo moto investigation in case of professional misconduct, recommendation to government about formulation of accounting and auditing policies and standards, imposing penalties, debarring members of the institute etc. 

“NFRA and ICAI shall co-exist and NFRA will be the overarching body, with large canvas to operate. NFRA will be a nodal agency for financial reporting with quasi-judicial powers and the power to suspend auditors.”

The power to formulate the policies and standards for accounting and auditing can be exercised by both bodies. By this power, there is possibility that both the authorities differ in opinion as to the standards or policies, or it would result in the duplication of work within both NFRA & ICAI.  This thing will also lead in confusion to government at several times.

NFRA is entrusted with a step up power from ICAI, which is to punish the audit firm also which ICAI cannot exercise. ICAI is empowered to punish only individual not the firm. As shown in landmark accounting fraud case of Satyam computer in 2008 in which the audit firm which prepares the fraudulent company accounts were never booked and only the partner who signed the accounts sheets was booked. Therefore, the NFRA is the body which can book the audit firm also for their misconduct in relation to the profession.