NFRA proposes to introduce annual transparency report requirement for audit firms

The central regulator has also put forward draft requirements to be followed by auditors and audit firms for preparation of Annual Transparency Report (ATR).

NFRA claims that the effort is aimed at increasing transparency regarding the management and governance of audit firms and their internal policy framework. It added that it would ensure high quality audits and prevent conflict of interest while maintaining independence.

The regulator said, “It is proposed to introduce ATR requirements in a graded manner for PIEs (Public Interest Entities) starting with the statutory auditors of top 1,000 listed companies (by market capitalization) from the financial year ending March 31, 2023.” is proposed.” in a release.

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An audit firm has to publish ATR within three months from the end of each financial year.

“Transparency Report containing certain important information about the auditor’s operational activities, management, governance and ownership structures, and the policies and procedures required to deliver a high quality audit, etc. The information contained in the ATR is available to investors, audit committees, independent will be useful to directors and the public at large,” the release said.

The NFRA has set a deadline of February 16 to seek public comments on the draft requirements.

NFRA said the proposed ATR requirements are in line with contemporary international best practices implemented by some of the leading independent audit regulators in other jurisdictions.

“Indian companies have become important constituents of the global economy and India has evolved as a global center of excellence in the delivery of financial reporting and auditing services to a large number of multinational corporations, as compared to sound and high quality codes and practices. raising expectations.” to the global benchmark,” it added.

With PTI inputs.