NFRA to clarify on past audit jurisdiction soon
New Delhi: The National Financial Reporting Authority (NFRA) will soon offer clarity on its authority to review the statutory audits of companies conducted before its establishment on 1 October 2018. The clarification will address concerns of stakeholders following a Supreme Court ruling on Monday dismissing a petition which raised questions on the watchdog’s retrospective jurisdiction, a person aware of the development said. The watchdog will dispel doubts about its jurisdiction for past periods, and clarify the extent of regulatory oversight of statutory auditors in the country.
Last month, the Bombay High Court instructed NFRA to hear the case of Chaturvedi & Shah LLP, the statutory auditor for Dewan Housing Finance Corp. Ltd, for 2017-18. The firm had challenged NFRA’s jurisdiction for periods predating its creation, following an audit quality review of the financial institution conducted by the audit regulator.
Following the Bombay HC’s directive, NFRA is preparing to determine its jurisdiction. On Monday, the apex court dismissed a special leave petition filed by the audit firm, challenging Bombay high court’s order, the publicly available court document showed. Early this year, NFRA had issued separate orders for individual auditors and firms responsible for branch audits of DHFL across states in FY18, alleging deficiencies.
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