NFRA to now regulate audit and auditors of vulnerable entities

With the objective of arresting the financial scams that the nation has witnessed of late the ministry of corporate affairs (MCA) has finally rolled out the National Financial Reporting Authority Rules, 2018 (Rules), from 14 November 2018, ostensibly along the lines of independent audit regulators in global economies. With the Rules coming into force since 14 November 2018, the corporate and auditor fraternity is hit by a common fear that companies that are not to be regulated by NFRA, will have to file the form before 13 December 2018, which is extremely close. The reason for the apprehension seems to be the use of the uncommon phrase body corporate, other than a company in clause (2) and (3) of Rule 3. It is to be noted that NFRA-1 is nothing but the filing of particulars of the auditors We should note that all the companies are anyway required to file these particulars in e-form ADT-1. It is only the body corporates other than companies which were so far not doing this filing, and therefore this Rule is mandating the filing of the said particulars by body corporates. This filing has to be done once by all such body corporates before 13 December 2018 and going forward, within 15 days of the appointment of the auditor. Since the filing is mandated for body corporates only (other than companies), it is to be noted that such body corporates will require a GLN to do the filing. Body corporates that are not companies, do not have a corporate identity number (CIN) allotted by the ministry of corporate affairs and therefore will have to necessarily obtain a GLN so as to proceed with the filing

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