Lok Sabha Question No. 218 (UNSTARRED), answered on 2021-07-19
Subject: Setting up of TAC
Ministry: CORPORATE AFFAIRS
Asked by: Chandra Sekhar Bellana, Reddeppa Nallakonda Gari, Pocha Brahmananda Reddy, Chinta Anuradha, Kotagiri Sridhar

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA UNSTARRED QUESTION NO. 218 ANSWERED ON MONDAY THE 19 TH  JULY, 2021 {ASHADHA 28, 1943 (SAKA)}

## SETTING UP OF TAC

## QUESTION

218. SHRI CHANDRA SEKHAR BELLANA:

SHRI N. REDDEPPA: SHRI POCHA BRAHMANANDA REDDY: SHRIMATI CHINTA ANURADHA: SHRI SRIDHAR KOTAGIRI:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether the Government has set up a Technical Advisory Committee (TAC) recently to provide National Financial Reporting Authority (NFRA) with inputs from the perspective of various key stakeholders.
- (b) if so, the details thereof including the composition and terms of reference of the Committee; and
- (c) the details of the steps the NFRA has taken till date to achieve its fundamental objective of driving in systemic change in the Indian Financial Reporting System for Public Interest Entities (PIEs)?

## ANSWER

THE MINISTER OF  STATE  (INDEPENDENT  CHARGE)  OF  THE  MINISTRY  OF STATISTICS AND PROGRAMME IMPLEMENTATION; MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF PLANNING; AND MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS.

(RAO INDERJIT SINGH)

(a) & (b): National Financial Reporting Authority (NFRA) has set up a Technical Advisory Committee (TAC) on 17.07.2020.  The composition, Term of Reference and details of functioning of TAC are as under:

## COMPOSITION:

|   S.No. | Name and Designation                                                                    | Position   |
|---------|-----------------------------------------------------------------------------------------|------------|
|       1 | Dr R Narayanaswamy, Professor, Indian Institute of Management, Bangalore                | Chair      |
|       2 | Ms. Vidya Rajarao, Chartered Accountant and Certified Fraud Examiner                    | Member     |
|       3 | Ms. Gargi Ray, Chief Financial Officer of Infosys Consulting Group                      | Member     |
|       4 | Mr. Anantha Narayan, Former Head of Equity Research at Credit Suisse and Morgan Stanley | Member     |
|       5 | Mr. Shriram Subramanian, Managing Director, InGovern                                    | Member     |
|       6 | Mr. S Subramaniam, Chief Financial Officer, Titan Company Limited                       | Member     |
|       7 | Mr. Suhas Tuljapurkar, Managing Partner, Legasis                                        | Member     |

## TERMS OF REFERENCE:

- (i) Aid and advise the Executive Body (EB) of the NFRA on issues relating to the drafts of accounting standards and auditing standards;
- (ii) Advise  on  improvements  to  the  processes  followed  by  the  EB,  especially relating to AQRs (Audit Quality Reviews);
- (iii) Provide  inputs  form  the  perspectives  of  users,  preparers,  and  auditors  of financial statements;
- (iv) Advise on suitable methods for promoting awareness relating to compliance with accounting and auditing standards and role of the NFRA in protecting investors through independent auditor regulation;
- (v) Advise on development of measures of audit quality;
- (vi) Any other matter that may be referred to the Committee by the EB.

## DETAILS OF FUNCTIONING OF TAC:

- (i) The members will serve part-time on the TAC, attending meetings as and when convened by the Chair.
- (ii) The  agenda  for  meetings  will  be  finalised  by  discussion  between  the Chairperson, NFRA, and the Chair of the TAC.
- (iii) The  TAC  will  submit  its  recommendations  to  Chairperson  NFRA,  who  will consider the same for appropriate action.
- (iv) The meetings of the TAC shall ordinarily be though Video Conferencing. When felt necessary by the Chair, TAC, and the Chairperson, NFRA, meetings in person may also be held.
- (v) The TAC will keep matters brought before the Committee / discussed in the Committee / recommended by the Committee in strict confidence.
- (vi) In case of any conflict of interest on any matter brought before the TAC, the member concerned should bring it to the notice of the Chair who will decide if the member can participate / needs to recuse himself from the discussion.
- (vii) The TAC may invite, or seek the opinion of, any expert relating to any matter.

(viii) Sitting Fees, and Travelling and Daily Allowances for the Committee members and the Chair will be as decided by Ministry of Corporate Affairs.  Normally, a sitting is expected to occur once in about two months, depending upon the subjects that may arise. (ix) The tenure of the TAC will be one year from the date of its first meeting, or as decided by Chairperson NFRA, whichever is earlier. (x) On any matter not covered by the above, the decision of the Chairperson, NFRA, will be final. (c): Ministry of Corporate Affairs had directed NFRA to conduct investigation in respect  of  Infrastructure  Leasing  &  Financial  Services  Limited  (IL&FS).    In  this reference, NFRA has carried out the following: (i) (a) NFRA has released three Audit Quality Review (AQR) Reports in respect of Statutory Audit of IL&FS Financial Services Limited (IFIN) for the Financial Year   2017-18. (b) NFRA has sent its report to the Ministry of Corporate Affairs on violations of Companies Act, 2013, covering action required to be taken against other than the auditors, based on the Audit Quality Review (AQR) of statutory audit of IL&FS Financial Services Limited (IFIN) for the financial year 2017-18. (c) NFRA  has  issued  three  orders  against  Chartered  Accountants  under Section 132(4) of the Companies Act for proven professional misconduct.  The said orders have not been given effect to so far owing to the orders of Hon`ble High Court of Delhi. (d) NFRA has issued show cause notices, in terms of Section 132(4) of the Companies  Act,  2013,  to  2  audit  firms  and  2  Chartered  Accountants  in respect of professional misconduct relating to Statutory Audits. Proceedings in respect of these notices are presently in abeyance owing to orders of the Hon'ble Delhi High Court. (e) NFRA has finalised and conveyed to the Ministry of Corporate Affairs its recommendations with regard to various Auditing and Accounting standards, and the Companies Auditors Report Order. (ii) NFRA has issued show cause notices to 2 audit firms with regard to premature resignation from the statutory audit of listed entities. (iii) Audit quality reviews and financial reporting quality reviews of various entities have been initiated. (iv) Training to staff has been imparted for carrying out Audit quality reviews and Financial reporting quality reviews. (v) The TAC submitted its Report on Enhancing Engagement with Stakeholders on 28.03.21. NFRA has examined the recommendations of the TAC and has put out a Consultation Paper giving its preliminary planned course of action thereon, and has invited comments on the same.

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