Skip to content

CMA Intermediate · Business Laws and Ethics · Internal Financial Control for Financial Reporting

Under Section 132 of the Companies Act, 2013, which function is assigned to the National Financial Reporting Authority?

The NFRA makes recommendations to the Central Government on formulating and laying down accounting and auditing policies and standards for adoption by companies or their auditors. It also monitors compliance and oversees service quality, but it does not appoint auditors, fix dividends or audit companies.

  1. AMaking recommendations to the Central Government on accounting and auditing policies and standards for adoption by companies or their auditorsCorrect
  2. BAppointing the statutory auditors of every listed company
  3. CPrescribing the rate of dividend a company must declare
  4. DAuditing the accounts of companies on behalf of the Central Government

Explanation

Section 132(2)(a) requires the NFRA to make recommendations to the Central Government on formulation and laying down of accounting and auditing policies and standards. The Act gives it no power to appoint auditors, set dividends or conduct company audits. Its own accounts are audited by the CAG.

Did you get it right without looking?

One question tells you little. A timed set on Internal Financial Control for Financial Reporting shows your real accuracy, how long you take and where you lose marks.

Practise Internal Financial Control for Financial ReportingFree diagnostic mock

More Internal Financial Control for Financial Reporting questions