SC Lets Nfra Decide on Penal Powers Over Audit Quality Controllers | Today news

New Delhi: The National Financial Reporting Authority (NFRA) has got a boost to its power with the supreme court allowing the audit regulator to decide on a dispute over its power to occupation profit Guiding statutory auditors, showed an order from the apex court.

The Supreme Court on 7 March Allowed NFRA to pass an order on the matter and disposed of a delhi high court order in january that hadted that nfra had no pores to pena ‘Engagement quality control reviewers’ (EQCR).

On Nfra’s appeal against the high court ruling, the apex court said that a professional who was is is is is is is is is the show cause notice by nfra can file their objections to the regulator and blessed, nfra mus Consider them on bot jurisdictional issues and other aspects before passing a well-resoned order, showed the apex court Order Seen by Mint,

Also read | Nfra inches ahead of icai in regulatory turf

Audit ‘Engagement Quality Control Reviewers’ Are Experienced Professionals Within An Audit FIRM or from OUTSIDE, Who Evaluate an Audit Report, The Significant Judgments in Its, Before it is Isied by the auditor. This can also be done by a team under a chartered accountant.

Given their role in the statutory audit of companies and thus on the accuracy of financial reporting, nfra wants to have its regulatory oversight over them. The Delhi High Court Order on 30 January, However, Had Said An Eqcr Partner would not fall with Fall with Other Professional.

“The Delhi High Court has styed nfra’s proceedings against some engagement Quality Control Review Partners. Nfra challenged one of that orders in the supreme court. The apex court ruling in March in effect This ruling also indicates that the apex court was not in favor of challenging the regulator’s show cause notices in courts, while it is undersrstandable to move Court Against the Final Order of the Regulator, ”SAIDAUTOR Informed about the development.

Also read | NFRA Board Revises All Audit Standards Despite ICAI DISSENT

Why is the order important

The Supreme Court Order is a significant development on the issue of Nfra’s jurisdiction over Engagement Quality Control Review Partners, Said the Person, Who Spoke on CONDITION OF CONDITION of.

An engagement quality control reviewer is appointed in case of select audits, based on the nature, complexity and size of the audit, explained nemish kapadia, Partner at Audit and Tax Service Firm Sudit Parekh & Co llp.

“The role of an engagement quality control reviewer is essentially that of a gate keeper and a bouncing board to the audit engine team. Once Appointed, The EQCR is required to be involved on all critical and judgmental area in the given audit. However, these professionals do not sign the audit report. The concerns raised by them need to be respected but the final decision, essentially, is taken by the signing partner, ”said kapadia.

The Supreme Court also also told nfra not to take any coercive action against the professionals till the watchdog come out with its order on the issue of jurisdiction. If that order goes against the quality reviewers, they can challenge it as per law, showed the order.

Also read | Decoding the Supreme Court’s Decision: Implications for Merger Control in India

Queries emailed to nfra on tuesday seeking comments for the story remained unanswered at the time of publishing.