It is now clarified by National Financial Reporting Authority that Public Sector Banks would also come under their Audit.
- It was felt that PSU banks do not come under NFRA rules since banks do not fall under the purview of Banking Companies and hence NFRA cannot subject them to any Audit.
- Now NFRA has amended the rules to include even the new corresponding banks (basically all PSBs) within its scope.
- Now NFRA would be empowered to
- monitor and enforce compliance with accounting standards and auditing standards
- Oversee the quality of service rendered by auditors in Public Sector Banks and
- Undertake investigation of Auditors of PSBs
- This will also be applicable to the auditors of erstwhile subsidiary banks of State Bank of India. This implies that NFRA can take action on Auditors of the subsidiary banks even though they are merged with their parent wing.
Following are the NFRA rules:
- Taking out the CA institute’s monitoring and disciplinary powers over auditors of listed entities and large unlisted companies apart from banks and insurance companies Centre in November 2018 had notified the NFRA rules.
- Being the all-powerful body with regard to disciplinary actions, NFRA is empowered to take initiate action against Auditors and also supervise the quality of service rendered by Auditors.
POWERS OF NFRA
NFRA is vested with the following powers.
- Power to monitor and enforce compliance with accounting standards and auditing standards.
- Oversee the quality of services rendered
- Undertake investigation of auditors of listed entities
- With Paid up capital of not less than Rs. 500 crores or
- Annual turnover of over Rs. 1000 crores or
- Those having aggregate loans, debentures or deposit of not less than Rs. 500 crores as of March 31st of the preceding Financial Year.
- Also NFRA has the oversight over the auditors of Banks, Insurers, Electricity firms and body corporates referred by the Centre.