Manoj Fadnis, newly elected president of The Institute of Chartered Accountants of India (ICAI), said on Monday the setting up of a National Financial Reporting Authority (NFRA) should not be rushed.
Its domain would overlap with ICAI in many ways and Fadnis, elected the latter's president on February 12, said: "NFRA needs some more deliberation and dialogue with the government. We think the government is right in not implementing it till date."
Through Section 132 of the Companies Act, 2013, the Centre introduced a new regulatory authority known as NFRA, with wide powers to recommended, enforce and monitor the compliance of accounting standards. Experts say the various objectives of NFRA, as prescribed in the law, are to that of ICAI.
K Raghu, then ICAI president, had said in March 2014 that the accounting body had told the ministry of corporate affairs that there was no need for duplicating the work of regulators.
What ICAI has done over the years should not be replicated by NFRA, as the former is doing its job well and will continue to do so in the future, he had said.
For example, overseeing the quality of service of professionals associated with ensuring compliance; monitoring and enforcing the compliance with accounting standards; making recommendations to the central Government on the formulation and laying down of accounting and auditing policies.
"The government has assured us that ICAI will be fully consulted before implementation of NFRA," Fadnis added.
The Companies Act, 1956, had empowered the central government to form the National Advisory Committee on Accounting Standards (NACAS). "This is now being renamed with enhanced powers and authority as NFRA," said S Sriram, principal associate, Lakshmikumaran & Sridharan Attorneys.
According to the new Companies Act, NFRA would have the same powers as vested with a civil court under the Code of Civil Procedure. These could be related to discovery and production of books of account and other documents; summoning and enforcing the attendance of persons and examining them on oath; inspection of any books, registers and other documents of any person, etc.