In the Companies Act 2013, the Central Government has introduced a new authority named asNational Financial Reporting Authority with wide powers to recommend, monitor and enforce the compliance of accounting and auditing standards. The Companies Act 1956 gives powers to Central Government to form a committee for giving a recommendation on Accounting Standards is National Advisory Committee on Accounting Standards.
Salient Features of the new Act Section 132 of the Act provides that 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. It further provides that this Authority shall—
- make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by Companies or class of Companies or their Auditors, as the case may be;
- monitor and enforce the compliance with accounting standards and auditing standards recommended by it in such manner as may be prescribed;
- oversee the quality of services of the professionals 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
- perform such other functions relating to aforesaid powers as may be prescribed.
Composition of the Authority: The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance, law, to be appointed by the Central Government and such other members not exceeding fifteen as may be prescribed