New Delhi: The National Financial Reporting Authority (NFRA) has published draft requirements regarding the preparation and publication of annual transparency reports (ATR) by auditors and audit firms.
In accordance with Rule 8(2) of the NFRA Rule 2018, NFRA intends to prescribe the publication of ATR containing certain critical information about the auditor’s operational activities, management, governance and ownership structures, and policies and procedures necessary to deliver high-quality audits.
The move is aimed at enhancing the transparency about management and governance of audit firms and their internal policy framework to ensure high-quality audits and prevent conflict of interest by maintaining independence.
NFRA has also decided to seek public comment and suggestions on the contents of the ATR by February 16, 2023.
The information contained in the ATR will be useful to investors, audit committees, independent directors and the public at large.
The ATR requirements are proposed to be implemented in a gradual manner for entities starting with statutory auditors of the top 1,000 listed companies (by market capitalisation) with effect from the financial year ending on March 31 2023. The ATR has to be published within three months from the end of each financial year.