As per the newly notified rules, the National Financial Reporting Authority will have the power to monitor and enforce compliance with accounting standards and auditing standards, oversee the quality of service and undertake investigation of the auditors of listed entities; unlisted entities with paid-up capital of not less than ₹500 crore or annual turnover of over ₹1,000 crore or those having aggregate loans, debentures or deposits of not less than ₹500 crore as of March 31 of the preceding financial year. Most of these companies are audited by the Big Four accounting firms viz. PWC, EY, KPMG and Deloitte
The NFRA will also have oversight over auditors of banks, insurers, electricity firms and also those body corporates referred to it by the Centre. In this category, the NFRA is likely to find many domestic firms which are found to be the Central Statutory Auditors of State owned banks.
The NFRA will maintain details of particulars of auditors appointed by companies; recommend accounting and auditing standards for approval by the Central government; monitor and enforce compliance with accounting standards and auditing standards. This authority will also oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in quality of service.
The NFRA will cooperate with national and international organisations of independent audit regulators in establishing and overseeing adherence to accounting standards and auditing standards, said the latest rules.