Constitution of National Financial Reporting Authority.
132. (1) The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act.
(2) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—
(i) make recommendations to the Central Government on the formulation andlaying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;
(ii) monitor and enforce the compliance with accounting and auditing standards recommended by it in such manner as may be prescribed;
(iii) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of services and such other related matters as may be prescribed; and
(iv) perform such other functions as may be prescribed.
(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance, business administration, business law, economics or similar disciplines, to be nominated by the Central Government and such other members not exceeding fifteen as may be prescribed:
Provided that the terms and conditions of appointment of the chairperson and members shall be such as may be prescribed:
Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their appointment.
(4) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—
(i) have the power to investigate, either suo moto or on a reference made to it by the Central Government, for such class of bodies corporate or persons, in such manner as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, cost accountants or company secretaries in practice consituted under the Chartered Accountants Act, 1949, (38 of 1949. ) the Cost and Works Accountants Act, 1959 (23 of 1959. ) and the Company Secretaries Act, 1980 (56 of 1980. ) respectively or any other profession as may be prescribed:
Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section;
(ii) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, (5 of 1908. ) while trying a suit, in respect of the following matters, namely:—
(a) discovery and production of books of account and other documents, at such place and at such time as may be specified by the National Financial Reporting Authority;
(b) summoning and enforcing the attendance of persons and examining them on oath;
(c) inspection of any books, registers and other documents of any person referred to in clause (b) at any place;
(d) issuing commissions for examination of witnesses or documents;
(iii) where professional or other misconduct is proved, have the power to make order for—
(a) imposing penalty of not less than one lakh rupees in case of individuals and not less than ten lakh rupees in case of firms;
(b) debarring the member or the firm from engaging himself or itself from practice as member of the institute for a minimum period of six months or for such higher period not exceeding ten years as may be decided by the National Financial Reporting Authority:
Provided that the Appellate Authority constituted under section 22A of the Chartered Accountants Act, 1949, (38 of 1949. ) under section 22A of the Cost and Works Accountants Act, 1959 (23 of 1959. ) and under section 22A of the Company Secretaries Act, 1980 (56 of 1980.) shall be deemed to the appellate authority against any order made by the National Financial Reporting Authority and any person aggrieved by any order of the National Financial Reporting Authority shall have the right to appeal before the appellate authority in such manner as may be prescribed.
Explanation.— For the purposes of this section, the expression “professional or other misconduct” shall have the same meaning respectively assigned to it under section 22 of the Chartered Accountants Act, 1949, (38 of 1949. ) the Cost and Works Accountants Act, 1959 (23 of 1959. ) and the Company Secretaries Act, 1980. (56 of 1980. )
(5) The National Financial Reporting Authority shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings in such manner as may be prescribed.
(6) The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed.
(7) The head office of the National Financial Reporting Authority shall be at New Delhi and the National Financial Reporting Authority may, meet at such other places in India as it deems fit.
(8) The National Financial Reporting Authority shall cause to be maintained such books of account and other books in relation to its accounts in such form and in such manner as the Central Government may, in consultation with the Comptroller and Auditor-General of India prescribe.
(9) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and such accounts as certified by the Comptroller and Auditor-General of India together with the audit report thereon shall be forwarded annually to the Central Government by the National Financial Reporting Authority.
(10) The National Financial Reporting Authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.
