NFRA to have power to impose penalty on audit firms

The Chartered Accountants Act, 1949 (Act) provides for imposition of punishment/penalties on members of the Institute of Charted Accountants of India (ICAI) if found guilty of misc-conduct.

Also, as per section 132(4) of the Companies Act, 2013, the National Financial Reporting Authority (NFRA) has been empowered to investigate either suo moto or on a reference made to it by the Central Government, into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949.

Shri P.P. Chaudhary, Minister of State for Corporate Affairs and Law & Justice stated in the Rajya Sabha today that the ICAI had submitted a proposal to the Government for amendment to the Act to, inter alia, provide for registration of audit firms, procedure for taking necessary disciplinary action against audit firms (on the lines of such procedure for individual members) and imposition of penalties on audit firms.

Section 132 of the Companies Act, 2013 provides for constitution of the National Financial Reporting Authority (NFRA) and sub- section (4) thereof confers powers on NFRA, for imposition of penalties on audit firms.

Source: PIB