NFRA proposes copious financial information disclosures by auditors of large listed companies
An Annual Transparency Report to be published on the websites of the auditors
– Burhanuddin Kholiya and Payal Agarwal | corplaw@vinodkothari.com
In a major step to ensure transparency of audit and non-audit services, and internal protocols, quality checks, etc being maintained by auditors or large listed entities, the National Financial Reporting Authority (NFRA), vide a letter dated 16th January, 2023 (hereinafter referred to as “Proposal”), has proposed publication of an Annual Transparency Report (ATR) by the auditors of top 1000 listed companies. The ATR contains copious data, and interestingly, requires financial information about the audit firm, as well as its network entities. NFRA indicates that this proposal is in line with global practices, citing examples of regulations in the European Union (EU) and Australia.
The Proposal is said to be in terms of Rule 8(2) of the NFRA Rules, 2018 which empowers NFRA to require an auditor to report on its governance practices and internal processes designed to promote audit quality, protect its reputation and reduce risks including the risk of failure of the auditor and may take such action on the report as may be necessary, is proposed to be implemented for FY23 to begin with.
A quick snapshot of the same can be referred here.
Read more →