**Executive Summary:**
This document summarizes the Indian Ministry of Corporate Affairs' response to questions regarding the National Financial Reporting Authority's (NFRA) activities, including audits, reviews, stakeholder engagement, and complaint resolution, over the past five years (2019-2025). It also addresses potential expansions of NFRA's jurisdiction and partnerships. The response details the number of reviews conducted, monitoring mechanisms, awareness initiatives, and complaint handling procedures.
**Key Points / Main Content:**
* **Audits and Reviews:**
* NFRA conducted Audit Quality Reviews (AQRs), Financial Reporting Quality Reviews (FRQRs) and Audit quality inspections of audit firms between 2019-2025.
* The number of reviews and inspections varies by financial year, with a focus on Audit Quality Inspections in the later years.
* **Monitoring NFRA's Effectiveness:**
* A Memorandum of Understanding (MOU) between the Ministry of Corporate Affairs and NFRA outlines performance parameters, output targets, and input requirements.
* **Partnerships:**
* NFRA has not partnered with academic or professional institutes for research in financial reporting standards.
* **Awareness Initiatives:**
* NFRA engages with stakeholders (CEOs, CFOs, Independent Directors) through webinars and conferences.
* NFRA issues circulars reiterating legal and standard provisions.
* NFRA publishes auditor-audit committee interaction series.
* NFRA collaborated with the Indian Institute of Corporate Affairs (IICA) to launch a 4-month course for independent directors and audit committee members.
* **Complaint Resolution:**
* NFRA has an online portal for filing complaints, which are addressed per existing guidelines.
* Quarterly reports on the status of show-cause notices are published on the NFRA website.
* **Expansion of Jurisdiction:**
* There is no current proposal to expand NFRA's jurisdiction to cover additional entities or sectors.
**Impact Analysis:**
**Ministry of Corporate Affairs:**
* *Impact:* Accountable for monitoring NFRA's performance via the MOU.
* *Action Required:* Continue monitoring NFRA's performance based on the MOU's parameters.
**National Financial Reporting Authority (NFRA):**
* *Impact:* Responsible for conducting audits, reviews, and engaging with stakeholders. Accountable for addressing complaints and improving financial reporting quality.
* *Action Required:* Continue conducting AQRs, FRQRs, and audit inspections. Maintain stakeholder engagement, issue informative circulars, and address complaints promptly.
**Companies and Auditors:**
* *Impact:* Need to be aware of their responsibilities and comply with financial reporting standards.
* *Action Required:* Participate in NFRA's webinars and conferences. Review and adhere to circulars issued by NFRA. Ensure compliance with financial reporting standards.
**Independent Directors and Audit Committee Members:**
* *Impact:* Enhanced capacity building through the course in collaboration with IICA.
* *Action Required:* Consider participating in the IICA course for capacity building.
**Stakeholders (CEOs, CFOs):**
* *Impact:* Increased awareness and guidance on financial reporting and auditing.
* *Action Required:* Engage with NFRA initiatives and implement best practices in financial reporting and auditing.
Key Entities Referenced
National Financial Reporting Authority: A regulatory body in India responsible for overseeing the auditing profession and enforcing accounting and auditing standards.
Shri Arun Bharti: Member of LOK SABHA who asked the question related to audit and reviews conducted by NFRA.
CORPORATE AFFAIRS: Ministry responsible for overseeing the regulation of Indian corporations.
SHRI HARSH MALHOTRA: Minister of State in the Ministry of Corporate Affairs and Minister of State in the Ministry of Road Transport and Highways, who provided the answer to the question.
Audit Quality Reviews: Reviews conducted by NFRA to assess the quality of audits performed by audit firms.
Financial Reporting Quality Reviews: Reviews conducted by NFRA to assess the quality of financial reporting by companies.
Indian Institute of Corporate Affairs: An institute that has collaborated with NFRA to launch a course for capacity building of independent directors and audit committee members of companies.
Memorandum of Understanding: An agreement between the Ministry of Corporate Affairs and National Financial Reporting Authority which spells out clearly performance parameters, output targets in terms of details of programme of work and qualitative improvement in output, along with commensurate input requirements
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 2488
ANSWERED ON MONDAY, AUGUST 04, 2025/ SRAVANA 13, 1947 (SAKA)
Audit and Reviews Conducted by NFRA
QUESTION
2488. Shri Arun Bharti:
Will the Minister of CORPORATE AFFAIRS
be pleased to state:
(a) the year-wise details of the audits and reviews conducted by National
Financial Reporting Authority (NFRA) during the last five years and the
mechanisms in place to monitor NFRA’s effectiveness in achieving its
goals;
(b) the details of the partnerships with academic and professional
institutions to advance research in financial reporting standards;
(c) the initiatives undertaken by NFRA to raise awareness among
companies and auditors about their responsibilities and the importance of
compliance;
(d) the steps taken to ensure timely resolution of complaints and maintain
the confidence of stakeholders in its regulatory processes; and
(e) whether the Government is considering to expand NFRA’s jurisdiction
to cover additional entities or sectors and if so, the details thereof?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND
MINISTER OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND
HIGHWAYS.
(SHRI HARSH MALHOTRA)(a) (i) Year-wise details of Audit Quality Reviews (AQRs), Financial
Reporting Quality Reviews (FRQR) and Audit quality inspections
of audit firms conducted by NFRA are as follows:
Financial Year Reviews No. of Reviews
2019-20 Audit Quality Review 01
2020-21 Audit Quality Review 01
Supplementary 01
Audit Quality Review
2021-22 Audit Quality Review 02
Financial Reporting 02
Quality Review
2022-23 Audit Quality Review 01
Financial Reporting 02
Quality Review
2023-24 Audit Quality 05
Inspection
2024-25 Audit Quality 07
Inspection
(ii) A Memorandum of Understanding between Ministry of
Corporate Affairs and National Financial Reporting Authority
spells out clearly performance parameters, output targets in
terms of details of programme of work and qualitative
improvement in output, along with commensurate input
requirements.
(b) NFRA has not partnered with any academic or professional institute
for research in financial reporting standards.
(c) NFRA has engaged extensively and periodically with stakeholders
including CEOs, CFOs, Independent Directors and members of the
profession and conducted a number of webinars on various topics
related to financial reporting and auditing, including an
international conference in 2024. It also issues circulars,
reiterating provisions in law and standards, to help prevent
recurrence of some observed non-compliances and to help bring in
systematic improvement in the quality of financial reporting in
India, towards advising and guiding various stakeholders. Further,
NFRA publishes the auditor-audit committee interaction series to
help improve communication between auditors and committees as
it is a significant parameter towards ensuring better audit quality.NFRA has also collaborated with Indian Institute of Corporate
Affairs (IICA) and a 4-month course has been launched for capacity
building of independent directors and audit committee members of
companies.
(d) NFRA has a dedicated online portal for filing complaints. The
complaints received are dealt with as per extant guidelines on
procedure for complaint handling in NFRA. Quarterly reports on
status of show cause notices are also published on NFRA website.
(e) At present, there is no such proposal under consideration.
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