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NFRA draws Conclusion on Enhanced Stakeholders Engagement

The National Financial Reporting Authority (NFRA), the audit authority, has issued conclusions based on comments received on the consultation paper on increased stakeholders engagement.

Overview – National Financial Reporting Authority (NFRA)

The National Financial Reporting Authority (NFRA) is an agency established under Section 132 of the Companies Act of 2013. This authority’s constitution went into force on October 1, 2018. In this respect, it seems that the Central Government’s objective is to:-

• Establishment of a distinct and independent regulatory agency to help in the formulation and enforcement of accounting and auditing legislation;
• Enhancing investor and public trust in an entity’s financial reporting.

The mandate of the NFRA encompasses all aspects of financial reporting by PIEs (Public Interest Entities), from standard-setting to reviewing and assuring a successful compliance with those Standards by stakeholders.

According to the NFRA Charter, the organization should be renowned for:-

Furthermore, the National Financial Reporting Authority (NFRA) has reached conclusions based on comments received on the consultation paper on increased stakeholders engagement.

This begins after NFRA requested its Technical Advisory Committee (TAC) to investigate the concerns and make recommendations.

According to a Ministry of Corporate Affairs release, the TAC filed its analysis report at the end of March 2021. NFRA reviewed the TAC’s reports and suggestions, and in June 2021 issued a consultation document requesting public feedback/suggestions on the suggested measures NFRA intended to take in this respect.

The deadline for submitting comments was July 30, 2021.

Significance of Stakeholders Engagement

• It provides companies with a social license in order to function, grow, and innovate.
• It strengthens the connection between businesses and their stakeholders.
• It boosts a company’s reputation and offers it a positive and strong public image.
• It saves money on lawsuits and boycotts.
• It assists businesses in identifying new trends, taking a proactive response to them, and acting with a first mover advantage over their competitors.

Stakeholders engagement and Input is sought on the following recommendations:-

• Stakeholders engagement

1. Establishment of Stakeholder Advisory & Consultancy Groups;
2. Fellowships for Practitioners and Academics;
3. Participation in public events/forums by NFRA Members/Staff.

• Inspection

1. Communication of Inspection Policy of the NFRA

• Communication and Advocacy

1. Redesign of the NFRA website to suit stakeholders’ primary information needs.
2. Webinars, newsletters, videos, and apps, among other things, to express NFRA’s viewpoints on issues of importance to stakeholders.
3. Collaborate with academic organizations to raise financial reporting awareness.

• NFRA’s independence, funding, and accountability

• Building regulatory capacity and a medium-term roadmap

1. Create a strategy and operational plan for the next 5 years.
2. Regulatory Capacity Building: Staffing and Training Programs

Moreover, NFRA has gained 17 comment letters from various stakeholders, including major industry associations, significant accounting firms, and research/academic institutions. Stakeholders have generally endorsed and supported NFRA’s recommendations to increase stakeholders engagement more proactively.

The Ministry stated, “NFRA has recognized interaction with numerous types of stakeholders as key in its approach to execute on its public interest mandate.”

According to the Ministry, NFRA has analyzed all public comments and reached decisions on how to proceed with the concerns raised in the consultation paper. The results of the NFRA, as well as the comments received, have been posted on its official website.

“NFRA appreciates all of its key stakeholders’ important suggestions/opinions,” it stated.

The Central Government created the audit watchdog in October 2018 with the primary goal of bringing about systemic reform in the Indian Financial Reporting System for Public Interest Entities (PIEs).

Overall, Stakeholders have endorsed NFRA’s recommendations to increase stakeholders engagement more proactively. NFRA has reviewed all of the public comments and reached decisions on how to proceed with the concerns raised in the Consultation Paper. The findings of the NFRA, as well as the comments received, are available on their website given:-

https://nfra.gov.in/document-category/consultation-papers/

NFRA-Consultation-Paper-on-TAC-Report-Enhancing-Stakeholder-Engagement-June-2021_compressed