Audit: Deadline extended for filing of NFRA-2 form with NFRA by Audit firms till May 09, 2020 : 12-03-2020

Auditor’s newest compliance hurdle is to file form NFRA- 2 with National Financial Reporting Authority (NFRA), an independent audit regulator. The general requirement is to file the form by 30 November every year. Form NFRA- 2 seeks information from audit firms about client which is quite extensive in nature & therefore there are difficulties faced by auditors to file the form within the required timeframe.

On a broad basis, NFRA-2 form seeks information on following aspects from audit firms:-

  1. Identity of the auditor and contact person

  2. Reporting period

  3. General information concerning the auditor

  4. Audit clients and audit reports – [Domestic as well as Foreign]

  5. Audit-related memberships, affiliations or similar arrangement of the auditor – This information is mostly regarding Big audit firms which leverage global brand and pull clients by leveraging the goodwill

  6. Partners and employees of auditors

  7. Details of disciplinary and other proceedings initiated against auditor

  8. Special circumstances such as resignations, etc.

  9. Quality control policies of auditor

At present, the auditor’s obligation to file form NFRA- 2 for the F.Y. 2018-19 was by 9 March 2020 (extended). Looking at the quantum of information required in the form and the complexities involved in getting the information from client, auditors were facing trouble in filling the form even within the extended time. Therefore, MCA/ NFRA has once again extended the time limit from 90 days (earlier extended period) to 150 days from the date of its publication on NFRA website which proves to be breather from auditor’s point of view. With this, statutory auditors get additional 60 days to file the form i.e. by 9 May 2020 with the authority.

Another major reason behind the extension of time for filing form is that NFRA came up with the format of form very late & the information sought was quite comprehensive.

Source : Times of India