NFRA to introduce annual transparency report requirement for audit firms

The watchdog said the proposed ATR requirements are in line with contemporary international best practices implemented by some of the leading independent audit regulators in other jurisdictions.

“Rule 8(2) of the NFRA Rules 2018 requires the NFRA to report on its governance practices and internal procedures designed to promote audit quality, protect its reputation and mitigate risks, including the risk of auditor failure. authorizes and may do so. Action may be necessary on the report,” NFRA said.

“Indian companies have become important constituents of the global economy and India has evolved as a global center of excellence in the delivery of financial reporting and auditing services to a large number of multinational corporations, which are governed by sound and high quality codes and practices. Raising expectations. to the global benchmark,” it added.

As per Rule 8(2) of the NFRA Rules 2018, publication of an annual transparency report containing certain important information about the operational activities, management, governance and ownership structures of the NFRA auditors, and the policies and procedures required to deliver high quality audits wants to determine. Etcetera.

The information contained in the ATR will be useful to investors, audit committees, independent directors and the public at large.

The regulator said, “It is proposed to introduce ATR requirements in a graded manner for PIEs (Public Interest Entities) starting with statutory auditors of top 1,000 listed companies (by market capitalization) from the financial year ending March 31, 2023.” is proposed.” in a release.

An audit firm has to publish ATR within three months from the end of each financial year.

NFRA has also decided to invite public comments/suggestions on the contents of the ATR by February 16, 2023.