The National Financial Reporting Authority (NFRA) issued its first audit report of IL&FS Financial Services Limited for the year 2017-18. It is the first report submitted by the authority since its constitution in October 2018. The audit was conducted abiding Section 13(2) of the companies act, 2013 and NFRA rules, 2018.
Prior to NHRA, the audit of the IL and FS financial services were conducted by Deloitte Haskins and Sells (DHS). NHRA reports that the audit conducted by DHS was inadequate.
IL and FS crisis
IL and FS is a non-banking financial company that was established 30 years ago in order to conglomerate funds for infrastructure projects in India. The company fell short of cash recently and faced cash over runs, delays in land acquisition and approvals in 2018.
National Financial Reporting Authority
National Financial Reporting Authority was established in 2018 under the Companies act, 2013. Due to the establishment of NFRA, India is now eligible for membership of International Forum of Independent Audit Regulators. It is a global member organization that includes regulators from 53 jurisdictions. It was established in 2006 at Paris. It works to enhance investor protection by improving auditing globally.
Companies act, 2013
The powers and function of NFRA is listed under Section 13(2) of companies Act, 2013.
Under Section 13 (2) of the Companies act, 2013, the NFRA is responsible to audit policies and standards in the country, impose sanctions against defaulting auditors, audit firms and their monetary penalties. It is also responsible to audit companies that are listed in stock exchanges and those that function outside India.