The International Forum for Independent Audit regulators (IFIAR)

The International Forum for Independent Audit regulators (IFIAR)

Subject: Economy

Why in the news?

The National Financial Reporting Authority (NFRA) has published its audit quality inspection guidelines.

Details:

• It aims to further improve the quality of audit profession.
• The inspection guidelines are on the lines of the best practices followed by International Audit Regulators.
• Inspections are intended to identify areas and opportunities for improvement in the audit firm’s system of quality control.
• Inspections will consist of firm-wide review of audit quality (SQC 1) and individual file reviews on test-check basis to evaluate the level of compliance with applicable auditing standards and quality control policy and processes.
• NFRA’s  Audit quality inspections 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 the overall financial reporting framework in the country.

Concept:

The International Forum for Independent Audit regulators (IFIAR)

• It is a General Incorporated Association
• Headquarters-Tokyo, Japan
• It was established in 2006 in Paris
• Comprises independent audit regulators from 54 countries- from Africa, Asia, Europe, North and South America and Oceania.
• IFIAR holds a Plenary meeting annually to discuss broad issues related to audit quality matters.
• It requires that audit regulators, should as a minimum, conduct recurring inspections of audit firms undertaking audits of public interest entities in order to assess compliance with applicable professional standards, independence requirements and other rules, laws and regulations.
• Since 2012, IFIAR conducts the Annual Inspection Findings Survey and publishes its report.
  • These reports show general trends of audit inspection findings.

National Financial Reporting Authority (NFRA) 

• National Financial Reporting Authority (NFRA) 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.
• NFRA is responsible for recommending
  • accounting and auditing policies and standards in the country,
  • undertaking investigations, and
  • imposing sanctions against defaulting auditors and audit firms in the form of monetary penalties and debarment from practice for up to 10 years.

Pursuant to the NFRA Rules, 2018, the powers of the NFRA were extended to include the governing of auditors of companies listed in any stock exchange, in India or outside of India, unlisted public companies above certain thresholds, and other companies specified therein.