9870310368 9810688945

Learning

Learning » MCA Notification » Last date for Filing of Form NFRA-2 by Audit Firms of Companies extended to 9th May, 2020

SP Services

Last date for Filing of Form NFRA-2 by Audit Firms of Companies extended to 9th May, 2020

Ruchi Gandhi

| Updated: Mar 14, 2020 | Category: MCA Notification

Last-date-for-Filing-of-Form-NFRA-2-by-Audit-Firms-extended-to-9th-May,-2020

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:

1. Companies whose securities are listed on any stock exchange in India or outside India
2. Unlisted public companies having paid-up capital of not less than Rs. 500 crores during the immediately preceding financial year
3. Unlisted public companies having an annual turnover of not less than Rs. 1000 crores during the immediately preceding financial year
4. Unlisted public companies having, in aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crores during the immediately preceding financial year
5. Insurance companies, banking companies, companies engaged in the generation or supply of electricity
6. Companies or body corporates governed by a Special Act for the time being in force
7. Body corporate registered outside India which is a subsidiary or associate of any of the aforesaid companies registered in India; and whose income or net worth exceeds 20% of the consolidated income or net worth of such aforesaid company

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.

What is NFRA-2?

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.

What is NFRA?

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.

Details required to be commented upon in Form NFRA-2

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:

  • Identity of the Auditor and Contact Persons: This shall include name and contact details of the auditor, income tax PAN of the auditor, auditor’s registration number with regulator or agency, registered address of the auditor, mailing address, telephone number of the auditor’s registered office, etc.
  • The beginning and close of the reporting period for the annual return.
  • General information concerning the auditor such as whether the auditor of a body corporate has been subjected to a review/check in the nature of a ‘quality control review’ concerning the audit and attestation services of the auditor by a regulator/agency in the relevant jurisdiction. If yes, the details of rating or adverse remarks by the regulator, if any.
  • Details of audit clients and audit reports of the auditor including the name of the company/body corporate for which the auditor conducts an audit, corporate identity number (CIN) or PAN of the body corporate, registered address of the company/ body corporate, date of the audit report, any modifications made in the audit report, total fees and expenses received by the auditor from each company or body corporate, any findings in the auditor’s report which are un-favourable or qualified, etc.
  • A total number of entities for which the auditor has issued any audit report(s) during the reporting period.
  • Details of whether the applicable Generally Accepted Auditing Standards (GAAS) and Generally Accepted Accounting Principles (GAAP) have been followed by the auditor.
  • Details of audit-related memberships, affiliations, or similar arrangements of the auditor.
  • Details of partners and employees of the auditor.
  • Details of disciplinary or other proceedings instituted against the auditor. This shall include the total number of criminal, civil or disciplinary actions or proceedings against any partner or employee of the auditor in connection with any audit in the past 5 years.
  • Information on whether the auditor has resigned from his post in any company/body corporate during the past three years.
  • Information on whether the auditor has withdrawn an audit report on financial statements, or withdrawn its consent to the use of its name in a report, document, or written communication in the past 3 reporting periods.
  • Information on quality control policies of the auditor. This shall include a statement of the quality control policies and procedures of the auditor for its auditing practices during the reporting period.

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.

Earlier Due Date of Form NFRA-2

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.

Updated Due Date of Form NFRA-2

The Ministry has given a breather for statutory auditors who were required to file the NFRA-2 form with the National Financial Reporting Authority (NFRA) latest by 9th March 2020. Now, the last date to file Form NFRA-2 is extended to 9th May 2020.

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:

Circular_06032020

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
Ruchi Gandhi

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.

Business Plan Consultant


Request A Call Back

Are you human?: 6 + 1 =

Categories

Startup CFO

Trending Articles

Hey I'm Suman. Let's Talk!