Big Five audit firms express concerns over NFRA’s functioning

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GlobalData

Mon, Mar 24, 2025, 4:36 AM 2 min read

The Big Five audit firms successful India are voicing concerns regarding the National Financial Reporting Authority's (NFRA) operational methods, suggesting they whitethorn beryllium successful contravention of the Companies Act 2013, reported Financial Express.

This comes arsenic the India’s Supreme Court is acceptable to perceive NFRA's entreaty against the Delhi High Court's determination that annulled 11 show-cause notices issued by the audit regulator successful April 2025.

In February 2025, the Delhi High Court upheld NFRA's authorization to analyse and penalise misconduct among chartered accountants (CA).

The bench, comprising Justices Yashwant Varma and Dharmesh Sharma, dismissed the petitions from idiosyncratic accountants and firms, including Deloitte Haskins and Sells, concluding that their objections lacked merit.

Following the High Court's decision, NFRA announced a reassessment of its strategy.

Auditors are present highlighting an contented with the Companies Act's conception 132 and NFRA Rules 2018, which they construe arsenic suggesting a separation of powers for probe and disciplinary actions.

They reason that the NFRA's enforcement body's existent relation successful some functions compromises neutrality and nonsubjective assessment, a interest besides noted by the Delhi High Court successful its caller order.

This perceived deficiency of neutrality by NFRA is reportedly affecting the audit firms' quality to pull and clasp talent.

CAs are said to beryllium choosing little risky vocation paths implicit auditing roles owed to the stringent regulatory environment.

An auditor from a Big Four firm, speaking connected the information of anonymity, told Financial Express that: “Regulators similar NFRA person to support a good balance, and guarantee that if it’s holding auditors accountable for lapses, its orders should besides beryllium viewed arsenic unbiased and successful compliance with the laws.”

In December 2024, NFRA's chairperson Ajay Bhushan Prasad Pandey acknowledged improvements successful auditing standards.

"Big Five audit firms explicit concerns implicit NFRA’s functioning " was primitively created and published by International Accounting Bulletin, a GlobalData owned brand.

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