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

Under the Companies Act, 2013, which authority has the power to constitute the National Financial Reporting Authority (NFRA), and by what means?

The Central Government constitutes the NFRA by notification under section 132(1) of the Companies Act, 2013. The Authority is meant to deal with matters relating to accounting and auditing standards under the Act; neither the ICAI nor the CAG constitutes it.

  1. AThe Central Government, by notificationCorrect
  2. BThe Institute of Chartered Accountants of India, by resolution
  3. CParliament, by passing a separate Act for each term
  4. DThe Comptroller and Auditor-General of India, by order

Explanation

Section 132(1) provides that the Central Government may, by notification, constitute the NFRA to deal with matters relating to accounting and auditing standards under the Act. The ICAI, Parliament and the CAG have no such power of constitution.

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