Advertisement
Private equity has played a significant role in shaping Indi...
In today’s real estate landscape, fitness is often treated...
In this episode of Prop Personalities, we sit down with Hars...
Luxury real estate is one of the most talked-about segments ...
Welcome to Prop Personalities by Prop News Time - a podcast ...
The National Financial Reporting Authority (NFRA) has reorganised its internal structure by creating four independent functional divisions—Monitoring & Oversight, Investigation, Determination, and Disciplinary—to enhance regulatory processes and ensure procedural neutrality. The move follows judicial scrutiny of NFRA’s enforcement framework, including a Delhi High Court ruling that upheld its statutory powers but raised concerns over procedural fairness in certain cases. The restructuring is positioned as an interim measure pending legislative changes under the proposed Corporate Law Amendment Bill, 2026, or the outcome of ongoing proceedings before the Supreme Court. The revised framework introduces a sequential and segregated process for handling cases, from preliminary assessment to final disciplinary action, with each division functioning independently to avoid overlap and improve transparency in decision-making.
The National Financial Reporting Authority has restructured its operational framework by establishing four independent functional divisions aimed at strengthening oversight, investigation and disciplinary processes within the regulatory body. The changes were formalised through an order issued earlier in the past week. Advertisement
The four divisions comprise Monitoring & Oversight, Investigation, Determination and Disciplinary, each designed to handle a specific stage of the regulatory process. The restructuring introduces a sequential workflow, beginning with preliminary assessment and culminating in disciplinary action, while ensuring functional separation between each stage.
Under the revised structure, the Monitoring & Oversight Division will first assess whether there is a prima facie case of violation. Upon such determination, the matter will be referred to the Investigation Division for detailed examination. Following the completion of the investigation, the Determination Division will evaluate the findings and, where required, forward the case to the Disciplinary Division for final action.
The Disciplinary Division will be presided over by the NFRA chairperson and will be responsible for adjudicating cases and imposing penalties or other actions where violations are established. The regulator specified that each division will operate independently, and members involved in one division will not participate in another division for the same case, ensuring separation of functions.
The restructuring comes against the backdrop of judicial scrutiny of NFRA’s procedures. In a ruling delivered earlier, the Delhi High Court upheld the validity of Section 132 of the Companies Act and the associated rules, which empower NFRA to investigate and act against professional misconduct by chartered accountants. However, the court had set aside certain show-cause notices and final orders, observing that the procedure in those cases lacked sufficient neutrality and objective assessment.
Subsequently, the regulator has approached the Supreme Court, challenging the aspects of the High Court’s ruling that quashed the notices and orders. The matter remains under consideration.
NFRA indicated that the creation of the four divisions is an interim measure, pending the enactment of the proposed Corporate Law Amendment Bill, 2026, or until the disposal of the ongoing cases before the Supreme Court, whichever occurs earlier.
Established in 2018 under the Companies Act, NFRA is tasked with overseeing auditing and accounting standards in India and ensuring compliance among professionals and firms. The authority is currently chaired by Nitin Gupta and includes full-time members overseeing its regulatory functions.
The revised structure is intended to address procedural concerns while reinforcing the regulator’s ability to carry out its mandate through a more structured and segregated approach to enforcement and oversight.
Source - PTI
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
