Lok Sabha Question No. 4799 (UNSTARRED), answered on 2018-03-23
Subject: NFRA
Ministry: CORPORATE AFFAIRS
Asked by: VIJAY KUMAR S.R., SADHU SINGH, YERRAM VENKATA SUBBAREDDY, T. RADHAKRISHNAN, SUNIL BALIRAM GAIKWAD, BALKA SUMAN, KAVITHA KALVAKUNTLA, KUNWAR HARIBANSH SINGH, T.G. VENKATESH BABU, BIDYUT BARAN MAHATO, ANJU BALA, Tejpratap Singh,Yadav, GAJANAN CHANDRAKANT KIRTIKAR, NARANBHAI KACHHADIA

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 4799 ANSWERED ON FRIDAY, THE 23rd MARCH, 2018/ CHAITRA 2, 1940 (SAKA)

## NFRA

## QUESTION

4799.  SHRI S.R. VIJAYAKUMAR:

PROF. SADHU SINGH:

SHRI Y.V. SUBBA REDDY:

SHRI T. RADHAKRISHNAN:

DR. SUNIL BALIRAM GAIKWAD:

SHRI SUMAN BALKA:

SHRIMATI KAVITHA KALVAKUNTLA:

KUNWAR HARIBANSH SINGH:

SHRI VENKATESH BABU T.G.:

SHRIMATI ANJU BALA:

SHRI BIDYUT BARAN MAHATO:

SHRI TEJ PRATAP SINGH YADAV:

SHRI GAJANAN KIRTIKAR:

SHRI NARANBHAI KACHHADIYA:

Will the Minister of CORPORATE AFFAIRS

be pleased to state:

- (a)    whether  the  Government  proposes  to  set  up  National  Financial  Reporting Authority (NFRA) to target the fugitive economic offenders fleeing the country and for creating a regulation of Chartered Accountants (CAs) and audit firms and if so, the details thereof along with the aims and objectives of NFRA;
- (b)  the number of cases pending with Institute of Chartered Accountants of India;
- (c)  whether NFRA is provided for in the Companies Act and if so, the reasons for not notifying the same so far;
- (d) whether India remains the only major economy where the audit profession is still considered self regulated, if so, the details thereof and the reasons therefor; and

कारपोरेट कार्य मंत्री

- (e) the aims and objectives of NFRA and the other steps taken/being taken by the Government to tighten and plug loopholes of the CAs?

## ANSWER

## MINISTER OF STATE FOR LAW AND JUSTICE                       (SHRI P. P. CHAUDHARY) AND CORPORATE AFFAIRS

विवि और न्याय एिं कारपोरेट कायय मंत्रालय में राज्य मंत्री

- (a) to (e):- As per sub-section (2) of Section 132 of the Companies Act, 2013 (the Act), the National Financial Reporting Authority (NFRA) shall-
- (i)  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;
- (ii) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;
- (iii)  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 as may be prescribed; and
- (iv)  perform such other functions relating to clauses (i), (ii) and (iii) as may be prescribed.

As per sub-Section (4) of the said Section, NFRA shall have the power to investigate the professional or other misconduct committed by any member or a firm of Chartered Accountants and to impose monetary penalty and debarring the member  or  the  firm  as  the  case  may  be  from  engaging  in  practice  where professional or other misconduct is proved.

As per the information provided by Institute of Chartered Accountants of India, as on 12.03.2018, 283 cases are pending at intermittent procedural stages, 654 cases are at Prima Facie Opinion stage, 313 cases are ready for being placed before the Board of Discipline and/or Disciplinary Committee and 397 cases are there in which Respondents have been prima facie found guilty by the Board of Discipline and/or Disciplinary Committee.

As per Section 141 of the Companies Act, 2013 as amended under the Companies (Amendment) Act, 2017, a person who, directly or indirectly, render any service referred to in Section 144 to the company or its holding company or its subsidiary company shall not be eligible for appointment as an auditor of a company.

The Department of Economic Affairs under the Ministry of Finance has informed that  there  have  been  instances  of  big  time  offenders,  including  economic offenders,  fleeing  the  country  to  escape  the  reach  of  law  and  accordingly  the Government has introduced The Fugitive Economic Offenders Bill, 2018 ('the Bill')

( श्री पी. पी. चौधरी )

in Lok Sabha on 12 th  March, 2018. The Bill would help in laying down measures to deter  fugitive  economic  offenders  from  evading  the  process  of  Indian  law  by remaining outside the jurisdiction of courts in India.  The Bill, will also inter alia, provide for expeditious confiscation of proceeds of crime and properties of the fugitive economic offender with a view to make him submit to the jurisdiction of courts in India.

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