News & Blog

Extension of the last date of Filing of Form NFRA-2

News & Blog

Form NFRA-2

In a circular dated 05th March 2020, The Ministry of Corporate Affairs (MCA) after the due examination has extended the last date of filing of Form NFRA-2. The time limit for filing of Form NFRA-2, for the reporting period Financial Year 2018-19, will be 150 days from the date of the deployment of this Form on the website of the National Financial Reporting Authority (NFRA).

Overview of NFRA Rules

In an earlier notification on 5th September 2019, Ministry of Corporate Affairs (MCA), has amended the National Financial Reporting Authority Rules, 2018, (NFRA Rules) and now these rules called as National Financial Reporting Authority (Amendment) Rules, 2019 {NFRA (Amendments) Rules, 2019} which have come into force on the date of their publication in the Official Gazette.

National Financial Reporting Authority (NFRA) was constituted under Section 132 of the Companies Act, 2013 as a quasi-judicial body with responsibility to ensure the overall quality of financial reporting

Purpose of Form NFRA-2

NFRA-2 is used by the Auditor to file Annual Return with the National Financial Reporting Authority where he mentions his Identity details, contact details, category, reporting period, jurisdictional information, Audit clients and reports, memberships, etc.

Need and Power of NFRA

Due to increasing fraud in the Financial Sector, the Government of India after due consideration with all the top authorities of India formed an entity called the National Financial Reporting Authority (NFRA). This authority is formed to regularize the audit standard that prevails in the country.

The power of this authority –

  • Recommend accounting and auditing policies and standards to be adopted by companies;
  • Monitor and enforce compliance with accounting standards and auditing standards.
  • The Financial Reporting Authority is empowered to oversee the quality of audit service and undertake an investigation of companies whose securities are listed on any stock exchange in India or abroad, as per the Companies Act, 2013.

Applicability of NFRA

The Authority shall have the power to monitor and enforce compliance with accounting standards and auditing standards, oversee the quality of service or undertake the investigation of the following companies and bodies corporate, namely: –

  • companies whose securities are listed on any stock exchange in India or outside India;
  • unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial Year
  • insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act
  • Any body corporate or company or person, or any class of bodies corporate or companies or persons, on a reference made to the Authority by the Central Government in public interest, and
  • a body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India

Note: 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 3 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.

Annual Form NFRA 2 to be filed by the Auditors

Every auditor covered in Rule 3 of the NFRA rules shall file an Annual Return (Form NFRA 2) on or before 30th November every year. Prior to NFRA (Amendments) Rules, 2019, this was originally due on 30 April of every year.

Non-Compliance of NFRA

The company and every officer of the company who is in default or the auditor or such other person who contravenes any of the provisions of these rules shall be punishable as per the provisions of section 450 of the Act.

Note: The NFRA can issue an order imposing monetary penalty and can debar an individual member or firm registered with the ICAI for six months to 10 years, for professional or any other misconduct.

General Circular issued by MCA for extension of filing NFRA-2

Form NFRA-2

Leave a Reply

Your email address will not be published. Required fields are marked *

We take processes apart, rethink, rebuild, and deliver them back working smarter than ever before.