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The due date of filing of Form NFRA-2 by audit firms has been extended to 9th May 2020.
The onus of filing of Annual Return Form (NFRA-2) is on the audit firms or auditors who execute the audit of certain companies prescribed under the NFRA Rules (depending upon their net worth, listing on the stock exchange and annual turnover).
These include auditors of:
Since the form is quite extensive in nature, difficulties are often faced by the auditors to file the form within the required timeframe. For this purpose, the extension granted by the MCA is a welcomed step by the auditors.
Table of Contents
NFRA- 2 is an Annual Return Form which seeks information from audit firms about their clients and is quite extensive in nature. Form NFRA-2 is required to be filed in accordance with Section 132 of the Companies Act 2013 along with Rule 5 of the National Financial Reporting Authority Rules, 2018.
Generally, the Ministry of Corporate Affairs (MCA) accords a responsibility on statutory auditors to file the NFRA-2 form with the independent audit regulator “National Financial Reporting Authority” by 30th November every year. This Annual Return Form is required to be filed online by the audit firms.
National Financial Reporting Authority is an independent regulator for the auditors of listed companies and large unlisted companies, in addition to banks and insurers. The authority is effective from 1st October 2018. It has been empanelled by the Central Government with a view to enforce robust applicability of auditing standards and to assure the quality of audits. The ultimate objective is to increase the confidence of investors and general stakeholders in the financial disclosures made by companies. NFRA has been constituted under the provisions of the Companies Act, 2013 in order to assist in the framing and regulation of legislations relating to accounting and auditing and to provide its recommendations in compliance of accounting standards & auditing standards.
For each and every audit, the statutory auditors are required to furnish detailed information pertaining to the audit, audit reports, audit qualifications or unfavourable comments, quality control procedures adopted, quality review and checks, etc.
The NFRA-2 Form requires the auditor to furnish the below-mentioned details in his Annual Return:
All of this detailed information may be used by NFRA for careful analysis and evaluation in connection with taking corrective measures and punitive actions against the auditors, if any.
Form NFRA – 2 (Filing Annual Return) was deployed on the website of National Financial Reporting Authority (NFRA) with effect from 9th December 2019. According to an earlier Circular No. 14/2019 dated 27th November 2019, released by the Ministry of Corporate Affairs, the due date for filing of Form NFRA-2 was considerably fixed on account of receipt of several representations concerning its extension. As per this earlier notification, the last date of filing Form NFRA-2 was 90 days from the date of publication of the said form on the website. Thus, the effective deadline date of form filing came to 9th March 2020.
A reason behind the extension of timeline was that NFRA came up with the form’s format quite late and close to the deadline of 30th November. Moreover, since the level of information which is sought to be given in such form was extensively comprehensive, more time was needed by the auditors for filing it. Quite a good amount of time and effort goes into the preparation of NFRA-2 Form.
Lately, the Ministry of Corporate Affairs again had been receiving various representations with regard to the extension of the last date of filing. After proper examination and in continuation to the MCA’s General Circular No. 14/2019 dated 27th November 2019, the deadline for filing of Form NFRA-2 has been further extended by the department. This is formalized vide MCA’s General Circular No. 07/2020 dated 5th March 2020. In pursuance of this notification, it has been clarified that the last date of filing Form NFRA-2 is now 150 days (previously 90 days) from the date of deployment of the said Form on the website of National Financial Reporting Authority (NFRA). Therefore, effectively, the audit firms are allowed to file Form NFRA-2 until 9th May 2020. It is important to be noted down here that this due date is relevant for the reporting period of Financial Year 2018-19. The move of extending the deadline is being appreciated as it would offer an ample amount of time to various audit firms to provide all sorts of information required.
For official notification, see here:
Also, Read: MCA extends the last date for filing of AOC-4 NBFC .
A CA together with MBA (Fin) and M Com, she relishes taking interest in insightful writing in the domain of taxation and finance. She has gained experience as a full-time author and has also served an accounting role in industry.
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