Lok Sabha Question No. 189 (UNSTARRED), answered on 2020-09-14
Subject: Setting up of NFRA
Ministry: CORPORATE AFFAIRS
Asked by: Vinod Kumar Sonkar, Bhola Singh, Raja Amareshwara Naik, Raksha Nikhil Khadse, Sukanta Majumdar

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 189 ANSWERED ON MONDAY, THE 14 TH  SEPTEMBER, 2020 {BHADRAPADA 23, 1942 (SAKA)}

## SETTING UP OF NFRA

## QUESTION

189.  SHRI VINOD KUMAR SONKAR:

SHRI BHOLA SINGH: SHRI RAJA AMARESHWARA NAIK: SHRIMATI RAKSHA NIKHIL KHADSE: DR. SUKANTA MAJUMDAR:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) whether  the  Government  has  set  up  National  Financial  Reporting Authority  (NFRA)  for  regulating  Chartered  Accountants  (CAs)  and  audit firms and if so, the details thereof including its powers/functions;
- (b) whether  the  NFRA  has  indicted  Deloitte  for  violating  guidelines  in audit of IL&FS Financial Services Ltd and if so, the details thereof;
- (c) the  details  of  cases/audit  review  investigated/undertaken  by  the NFRA and the action taken thereon; and
- (d) the  other  steps  taken/being  taken  for  monitoring  and  enforcing compliance with auditing standards by NFRA?

## ANSWER

THE MINISTER OF STATE FOR                    (SHRI ANURAG SINGH THAKUR) FINANCE AND CORPORATE AFFAIRS

वित् त एिं कारपोरेट कार्य मंत्रालर् में राज् र् मंत्री

( श्री अनुराग स ंह ठाकु र

)

- (a) : National Financial Reporting Authority (NFRA) has been constituted under Section 132 of Companies Act, 2013 on 01.10.2018. The functions of
- NFRA are as follows:
- (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;

Contd..2/-

- (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;
- (iv) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

The entities under the domain of NFRA have been prescribed in Rule 3 of NFRA Rules 2018.

The said Act and NFRA Rules can be accessed from the Acts & Rules menu in the website of NFRA https://nfra.gov.in

(b) & (c) : NFRA has issued Audit Quality Review Report (AQRR) in respect of audit done by Deloitte Haskins and Sells LLP (Firm Reg.  No 117366W/W100018) of IL&FS Financial Services Limited (IFIN) for the Financial Year 2017-18.

As per the said AQRR the said Audit firm has failed to comply with the requirements  of  the  Standards  of  Audit.    The  AQRR  report  has  been uploaded under notifications menu on NFRA website https://nfra.gov.in

Disciplinary action has been taken against the following Chartered Accountants (CAs) in respect of the said Audit.

- (i) CA Udayan Sen (Membership No 103884)
- (ii) CA Shrenik Baid (Membership No 31220)
- (iii) CA Rukshad Daruvala (Membership No 111188).

Copy of orders issued have been uploaded under notifications menu on NFRA website.  The said orders have presently been stayed by Hon`ble High Court of Delhi.

NFRA has also issued Audit Quality Review (AQR) Report in respect of audit done by BSR & Associates LLP (Firm Reg No 116231W/W-100024) of IL&FS Financial Services Ltd (IFIN) for the Financial Year 2017-18.  As per the said AQRR the appointment of the said Audit firm as the statutory auditor  of  IL&FS  Financial  Services  Ltd.  (IFIN)  for  the  year  2017-18  was illegal, since the said Audit firm was not eligible to be appointed as such auditor.  The said Audit firm has also failed to comply with the requirements of the Standards of Audit.  The said AQRR report has been uploaded under notifications menu on NFRA website https://nfra.gov.in

(d) : Further steps for Monitoring and Compliance of Auditing standards is through Audit Quality Review of Audit Engagements.

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