Question
Under which section of the Companies Act 2013 NFRA is constituted?Â
Refer to the following information to answer the next 4 questions (Q 19 to Q 21) A body constituted under the provisions of the Companies Act, 2013, established as an independent authority to regulate the auditing profession and the Indian Accounting Standards. The body is responsible for making recommendations regarding accounting and auditing standards. It also oversees the Quality of Service provided by the accounting and audit professions. It is expected that the body’s functioning would result in improved domestic and foreign investments, improved economic growth, assistance in the development of the audit profession and supporting the globalization of business through compliance with international practices. The aim of the Central Government in this regard appears to be: • Setting up of a separate and independent regulatory body to assist in the framing and enforcement of legislation relating to accounting & auditing and • Improving investor and public confidence in the financial reporting of an entity. The need for this authority arose as a response to various corporate scams in recent times. The body has the responsibilities to make recommendations on the foundation and laying down of accounting and auditing policies and standards, Monitor and enforce the compliance of the accounting standards and auditing standards, to oversee the quality of service of the professionals (such as auditors) and suggest measures required for improvement in the quality of service.Solution
The National Financial Reporting Authority (NFRA) was constituted on 01st October,2018 by the Government of India under Sub Section (1) of section 132 of the Companies Act, 2013. To continuously improve the quality of all corporate financial reporting in India.
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