The National Financial Reporting Authority (NFRA) will establish a single stakeholders’ advisory group as well as a research cell to assist the group as it attempts to improve interaction with stakeholders, but on-site inspection is not a priority for the almost three-year-old watchdog at this time.
Furthermore, NFRA, India’s independent accounting and auditing authority, believes that introducing a “settlement mechanism” for cases is simply one of several modifications that need to be made to the legislation to better define its scope.
These results were reached after the watchdog collected feedback on a consultation document published in June 2021. The report was based on NFRA’s Technical Advisory Committee’s (TAC) recommendations on the regulator’s engagement with stakeholders.
“It is highlighted that respondents support the creation of a single advisory body. To begin, NFRA will organise a single stakeholders advisory group… NFRA will establish a research cell that will assist the stakeholder advisory group, among other things “According to the regulator. A vast majority of responders, according to the regulator, have highlighted an urgent need for a resolution mechanism rather than a lengthy stand-alone law-making procedure.
“The introduction of a settlement mechanism is only one aspect of a whole raft of changes that need to be brought about in the law, to more properly define NFRA’s remit, and to provide it with the requisite functional, financial, and administrative autonomy for being an effective regulator, the watchdog said”.
“NFRA must be positioned as a regulator for the whole gamut of financial reporting, covering all processes and players in the financial reporting chain,” it stated, adding that the TAC has been asked to provide draught recommendations in this respect.
The regulator stated that the rules, particularly those pertaining to publishing and secrecy, are completely consistent with natural justice principles and are intended to serve the public good, according to an impartial evaluation.
It highlighted that industry groups and audit companies suggesting withholding information until a court of law makes a “final” (undefined) judgement of such things is “totally self-serving and unknown to any system of jurisprudence.”
In a statement summarising its conclusions on the consultation paper, NFRA stated, “Acceptance of these requests would utterly demolish any possibilities of the efficacy of financial reporting regulation.”
On-site inspections, according to the NFRA, will be considered at a later time when the organisation has the human resources to do so and if it is deemed beneficial. “In reality, the notion of remote working (also known as “Work from Home”) has recently acquired acceptance as a new normal. As a result, on-site inspection isn’t a top priority at this point “In the paper, the regulator stated.
Furthermore, the watchdog would explore collaborating with universities to provide academics with a platform to discuss their work, and universities may be asked to do empirical study in areas important to determining issues such as the necessity for carve-outs in Indian accounting standards.
Building regulatory capacity is a key step in NFRA’s mission to safeguard the public interest in a timely way, according to the organisation. Some elements of high-quality personnel recruitment and compensation would necessitate consideration and discussion with MCA (Ministry of Corporate Affairs), which will be begun, according to the statement.
The NFRA, which was established in October 2018, stated that stakeholders have generally indicated support for its initiatives to enhance stakeholder involvement more actively.
Source: The Hindu