How the NFRA review of the Big 4 can help other auditors

The National Financial Reporting Authority NFRA) has highlighted gaps in the audit orocesses of Deloitte Haskins Sells, Price Waterhouse Chartered Accountants, BSR Co., and SRBC Co. Kamlesh Vikamsey takes alook at the NFRA‘s observations and the lessons for the overall audit ecosystem

● The NFRA's regulatory remit

IN 2018, THE Government of India constituted the National Financial Reporting Authority (NFRA) under Section 132(1) of the Companies Act, 2013.

The NFRA has the authority to recommend accounting and auditing standards and policies, undertake inspections of the auditors and companies governed under its Rules and take disciplinary action for noncompliance.

The NFRA is also mandated to oversee the quality of service of the professionals to ensure compliance with accounting and auditing standards and to suggest improvements required in quality of their services. The regulatory was mainly formed with an intention to protect the public interest and the interests of investors, creditors and others associated with the companies by establishing high quality standards of accounting and auditing.

●The scope and objectives of the recent inspections

EARLIER INSPECTION REPORTS show there is a specific trigger either from Serious Fraud Investigation Office (SFIO), Securities and Exchange Board of India (Sebi) or another regulatory/government body, which results in action such as investigation of professional or other misconduct of the statutory auditor or non-compliance.