The Ministry of Corporate Affairs (MCA) today clarified that the National Financial Reporting Authority ( NFRA ) can impose the penalty on audit firms for wrongful acts.
The Chartered Accountants Act, 1949 (Act) provides for the imposition of penalties on members of the Institute of Charted Accountants of India (ICAI).
The ICAI had submitted a proposal to the Government for the amendment to the Act to, inter alia, provide for registration of audit firms, the procedure for taking necessary disciplinary action against audit firms (on the lines of such procedure for individual members) and the imposition of penalties on audit firms. Section 132 of the Companies Act, 2013 provides for constitution of the National Financial Reporting Authority (NFRA) and subsection (4) thereof confers powers on NFRA, for the imposition of penalties on audit firms. This was stated by Shri P.P. Chaudhary, Minister of State for Corporate Affairs and Law & Justice in the Rajya Sabha today.
