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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Legislative Framework of Corporate Governance in India

A governance workshop discusses section 133. Which role does the National Financial Reporting Authority play in the process of prescribing accounting standards, once it is constituted under section 132?

Once NFRA is constituted, the Central Government prescribes ICAI-recommended standards in consultation with NFRA and after examining its recommendations. NFRA does not prescribe the standards itself, and the National Advisory Committee is relevant only in the interim period before NFRA exists.

  1. AIt prescribes the standards directly and ICAI is only informed
  2. BIt is consulted, and its recommendations are examined, before the Central Government prescribes the standards recommended by ICAICorrect
  3. CIt approves the standards only after companies have adopted them
  4. DIt has no role, as only the National Advisory Committee on Accounting Standards is consulted

Explanation

The main text of section 133 says the Government acts on ICAI's recommendations in consultation with and after examination of the recommendations made by NFRA. The National Advisory Committee is relevant only under the proviso, until NFRA is constituted.

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