Why in news?

The National Financial Reporting Authority (NFRA) has introduced its audit quality inspection guidelines  as a step towards  further  improving the quality of audit profession.

Highlights

• The inspection guidelines are on the lines of the best practices followed by International Audit Regulators.
• Inspections will consist of firm-wide review of audit quality and individual file reviews on test-check basis to evaluate the level of compliance with applicable auditing standards and quality control policy and processes.
• It will provide an opportunity for feedback and course correction to the audit firms and at the same time foster a greater mutual understanding of the policies and procedures that underlie audit quality management.
• The inspections are intended to bring about systemic improvements in overall financial reporting framework in the country.

National Financial Reporting Authority (NFRA)

• It is an independent regulator set up to oversee the auditing profession and the Indian Accounting Standards under the Companies Act 2013.
• It came into existence in October 2018.
• The chairperson : Ajay Bhushan Pandey
• Jurisdiction: Statutory Body
• History : After the Satyam scandal took place in 2009, the Standing Committee on Finance proposed the concept of the National Financial Reporting Authority (NFRA) for the first time in its 21st report.

Objective : To improve the transparency and reliability of financial statements and information presented by listed companies and large unlisted companies in India.