TMI BlogNational Financial Reporting Authority Rules, 2018X X X X Extracts X X X X X X X X Extracts X X X X ..... Act ; (d) auditor means an individual or a firm including a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009) or any other Act for the time being in force, who has been appointed as an auditor of a company or a body corporate under section 139 of the Act or under any other Act for the time being in force; (e) Authority means the National Financial Reporting Authority constituted under sub-section (1) of section 132 of the Act ; (f) chairperson means the chairperson of the Authority; (g) Division means a division established by the Authority for the purpose of organising and carrying out its functions and duties; (h) Form means the Form annexed to these Rules; (i) full-time member means a member who has been appointed as such under sub-section (3) of section 132 of the Act ; (j) part-time member means a member of the Authority other than a full-time member. (2) Words and expressions used and not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act. 3. Classes of companies and bodies corporate governed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under clause (e) of sub-rule (1) shall provide details of appointment of its auditor in Form NFRA-1 . (4) A company or a body corporate other than a company governed under this rule shall continue to be governed by the Authority for a period of three years after it ceases to be listed or its paid-up capital or turnover or aggregate of loans, debentures and deposits falls below the limit stated therein. 4. Functions and duties of the Authority .- (1) The Authority shall protect the public interest and the interests of investors, creditors and others associated with the companies or bodies corporate governed under rule 3 by establishing high quality standards of accounting and auditing and exercising effective oversight of accounting functions performed by the companies and bodies corporate and auditing functions performed by auditors. (2) In particular, and without prejudice to the generality of the foregoing, the Authority shall:- (a) maintain details of particulars of auditors appointed in the companies and bodies corporate specified in rule 3; (b) recommend accounting standards and auditing standards for approval by the Central Government; (c) monitor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate, within such reasonable time as may be specified in the notice. (2) The Authority may require the personal presence of the officers of the company or body corporate and its auditor for seeking additional information or explanation in connection with the review of the financial statements of such company or body corporate. (3) The Authority shall publish its findings relating to non-complainces on its website and in such other manner as it considers fit, unless it has reasons not to do so in the public interest and it records the reasons in writing. (4) Where the Authority finds or has reason to believe that any accounting standard has or may have been violated, it may decide on the further course of investigation or enforcement action through its concerned Division. 8. Monitoring and enforcing compliance with auditing standards.- (1) For the purpose of monitoring and enforcing compliance with auditing standards under the Act by a company or a body corporate governed under rule 3, the Authority may: - (a) review working papers (including audit plan and other audit documents) and communications related to the audit; (b) evaluate the sufficiency of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. (4) The Authority may refer cases with regard to overseeing the quality of service of auditors of companies or bodies corporate referred to in rule 3 to the Quality Review Board constituted under the Chartered Accountants Act, 1949 (38 of 1949) or call for any report or information in respect of such auditors or companies or bodies corporate from such Board as it may deem appropriate. (5) The Authority may take the assistance of experts for its oversight and monitoring activities. 10. Power to investigate.- (1) Where the Authority has- (a) received any reference from the Central Government for investigation into any matter of professional or other misconduct under sub-section (4) of section 132 of the Act ; (b) decided to undertake investigation into any matter on the basis of its compliance or oversight activities; or (c) decided to undertake suo motu investigation into any matter of professional or other misconduct, after recording reasons in writing for this purpose, it shall forward the matter to its Division dealing with enforcement for carrying out investigation and other action. (2) If, during the investigation, the Authority has eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice shall enclose copies of documents relied upon and extracts of relevant portions from the report of investigation or other records. (4) The show-cause notice shall be served on the auditor in the following manner, namely - (a) by sending it to the auditor at the address provided by him or provided by the Institute of Chartered Accountants of India (if required by the Authority) by registered post with acknowledgement due; or (b) by an appropriate electronic means to the email address of the auditor provided by him or it or provided by the the Institute of Chartered Accountants of India (if required by the Authority): Provided that where the auditor is a firm - (a) a notice to a firm shall be deemed to be a notice to all the partners or employees of that firm as on the date of service of notice; (b) the notice shall call upon the firm to disclose the name or names of the partner or partners concerned who shall be responsible for answering the allegations; (c) the partner whose name is disclosed by the firm shall be responsible for answering the notice against the firm, and if no partner, whether erstwhile or present, of the firm owns responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Authority within thirty days of the order: Provided that where the auditor prefers an appeal against the order of the Authority, it shall deposit ten per cent. of the amount of the monetary penalty with the Appellate Tribunal. (2) If, within thirty days of the order passed under rule 11, the auditor neither pays the penalty nor appeals against the order, the Authority shall, without prejudice to any other action, inform about such non-compliance to every company or body corporate (including those not covered by rule 3) in which the auditor is functioning as auditor and every such company or body corporate shall appoint a new auditor in accordance with the provisions of the Act. (3) Where the order passed under rule 11 imposes a penalty on the auditor or debars the auditor from practice, the order shall be sent to every company or body corporate in which the auditor is functioning as auditor. (4) Where the order passed under rule 11 debars the auditor from practice or the order under sub-rule (2) is passed, the order shall be sent to every company or body corporate (including those not covered by rule 3) in which the auditor is functioning as auditor and every s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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