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

Under the Companies Act, 2013, which of the following is a function of the National Financial Reporting Authority (NFRA) under Section 132(2)?

NFRA makes recommendations to the Central Government on formulating and laying down accounting and auditing policies and standards for companies or their auditors. It does not itself prescribe standards, audit companies or register accountants; those roles lie with the Central Government, auditors and the Institute.

  1. AMaking recommendations to the Central Government on accounting and auditing policies and standards for adoption by companies or their auditorsCorrect
  2. BDirectly prescribing accounting standards for all companies without reference to the Central Government
  3. CConducting the audit of the accounts of all listed companies every year
  4. DRegistering chartered accountants and granting certificates of practice

Explanation

Section 132(2)(a) requires NFRA to make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards. Prescribing standards is done by the Central Government, so the second option is wrong. NFRA does not audit companies or register members.

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