Saturday, December 2, 2023

NFRA backs transparency report for audit firms

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NEW DELHI: In a first-of-its-kind move aimed at improving audit quality, the National Financial Reporting Authority (NFRA) on Monday proposed to introduce annual transparency reports’ requirement for audit firms.
The watchdog has come out with draft requirements to be followed by auditors and audit firms for preparing annual transparency reports (ATRs). According to the NFRA, the effort is aimed at enhancing the transparency about management and governance of audit firms and their internal policy framework to ensure high quality audits and preventing conflict of interest by maintaining independence.
“The ATR requirements are proposed to be implemented in a gradual manner for PIEs (public interest entities) starting with statutory auditors of top 1,000 listed companies (by market capitalisation) with effect from the financial year ending on March 31, 2023,” the regulator said in a release.
Audit firms will have to publish ATR within three months from end of fiscal. “Transparency report containing critical information about the auditor’s operational activities, management, governance and ownership structures, and policies and procedures necessary to deliver high-quality audits, etc. The information in the ATR will be useful to investors, audit committees, independent directors and public at large.” Public comments have been sought till February 16.

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