NATIONAL FINANCIAL REPORTING AUTHORITY (NFRA)

Introduction As per section 211(3C) of Companies act 1956, every balance sheet and profit & loss account of the Company shall comply with the accounting standards, as may be prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards (NACAS).

- Manish Kumar

Section 210A was enacted to constitute NACAS to advise the Central Government on the formulation and lying down of accounting policies and standards for adoption by companies or class of companies under this Act.

In the Companies Act, 2013, the nomenclature of the National Advisory Committee on Accounting Standards (NACAS) has been changed as National Financial Reporting Authority (NFRA) under section 132 and unlike NACAS it will not merely be an advisory body but a regulatory authority for auditing, accounting, and financial reporting. The role of the Authority has been extended to advise on matters related to Auditing Standards in addition to Accounting Standards and also to act as a regulatory body for the accountancy profession. Auditing standards will be prescribed by the Central Government after the recommendation of ICAI and in consultation by the National Financial Reporting Authority.

Composition of NFRA