However, the Institute of Chartered Accountants of India (ICAI) is of the view that existing framework of the regulator to perform these function is “adequate”.
“The government, however, is of the view that, in addition to the self regulation mechanism existing within the ICAI framework, there is a need for an independent regulator to inter alia oversee compliance with accounting and auditing standards and for oversight of audit professionals,” Minister of State for Corporate Affairs P P Chaudhary said in a written reply to the Lok Sabha.
Internationally, also independent regulators have been assigned these functions in over 50 countries.
The minister said that steps are underway for establishing the National Financial Reporting Authority (NFRA).
The Companies Act provides for setting up of NFRA for recommending to government on formulation and laying down of accounting and auditing policies, adoption of standards, monitoring their compliance and overseeing quality of service of professionals associated with such compliance.