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CMA Intermediate · Corporate Accounting and Auditing · National Financial Reporting Authority (NFRA)

Under the Companies Act, 2013, which authority constitutes the National Financial Reporting Authority (NFRA), and how is this done?

The NFRA is constituted by the Central Government through a notification. Section 132(1) gives the Central Government this power so that matters relating to accounting and auditing standards under the Act can be provided for. No other body has this power under the section.

  1. AThe Central Government, by notificationCorrect
  2. BThe Institute of Chartered Accountants of India, by a resolution of its Council
  3. CThe Securities and Exchange Board of India, by regulation
  4. DThe Parliament, by a separate Act for each term

Explanation

Section 132(1) provides that the Central Government may, by notification, constitute the National Financial Reporting Authority. The Institute, SEBI and Parliament are not given this power in the section, so the other options are wrong.

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