NFRA RULES 


A. Applicability:
# NFRA will monitor BIG COMPANIES AS FOLLOWS:
a. ALL Listed Companies/ Body Corporates; OR
b. Unlisted Companies with Paid up Capital or Loans > = INR 500 crores OR Turnover > = INR 1000 crores; OR
c. ALL Banks/Insurance/Electricity Companies; OR
d. Certain specific foreign Subsidiaries/Associates of Indian Companies.


Note - For auditor of these Companies, ICAI do not have any investigation role.


!!! COMPANY/AUDITOR ONCE GOVERNED BY NFRA WILL BE COVERED BY NFRA for 3 MORE YEARS EVEN IF LIMITS ARE REDUCED/ LISTED STATUS CHANGES. !!!


# For Other Companies, ICAI will have the power to initiate disciplinary proceedings.


B. Powers and Responsibilities of NFRA


# Notifying Accounting Standards & Auditing Standards – 


Firstly, ICAI Recommend ------ Then, NFRA will check ------ Then, Forward to CG for approval


# Monitoring Compliance of AS – For AS compliance, NFRA MAY REVIEW FS of such Companies and ask for further Information, seek additional information, initiate for penal proceeding if any wrongdoing.


# Monitoring Compliance of SA – For SA Compliance, NFRA MAY REVIEW AUDITOR WORKING PAPERS, check Sufficiency of Quality System within the Audit Firm, Supervise or Test the audit. 


Note – Means for Big Companies, Peer Reviewing Powers are now with NFRA and not with ICAI.


C. Filings with NFRA


# Notice to the authority by Body Corporate (other than Company) regarding Auditor – Form NFRA 1


# AUDITOR of Big Companies required to file ANNUAL RETURN to NFRA till 30th April every year.


D. Powers under Section 132 of the Companies Act, 2013


## Monitoring and Regulating Powers – recommend CG w.r.t. AS and SAs and checking proper compliance of the same, oversee quality of audit firms.


## Investigating and Summoning Powers – Investigation of audit firms, summoning and enforcing attendance, Inspection of records.


## Penalizing Powers – Individual Auditors (INR 1 Lakh to 5 times of Fees), Firm of Auditors (INR 5 Lakhs to 10 times of Fees).


## Debarring Powers – Debarring from Practice as a member of ICAI for a period of 6 months to 10 years.


AASHISH KUMAR JAIN & ASSOCIATES
CHENNAI