Government Appoints Ex-finance Secretary Ajay Bhushan Pandey as NFRA Chief

Context

The government has appointed former finance secretary Ajay Bhushan Pandey as chairman of the National Financial Reporting Authority (NFRA) for a period of three years.

Pandey, a 1984-batch Maharashtra cadre IAS officer, retired as revenue secretary in February last year.
- Prior to becoming revenue secretary, he was chief executive of the Unique Identification Authority of India (UIDAI).

About

About National Financial Reporting Authority (NFRA)

Various corporate scams in the Indian financial system (for exa. Punjab National Bank) put the scanner on the role of the auditors and the Institute of Chartered Accountants of India.
- This led to the formation of the National Financial Reporting Authority by the government as an independent audit regulator.
The NFRA acts as an independent regulator for the auditing profession.
The body has powers to review financial statements of companies, can seek explanations and probe irregularities with respect to accounting and auditing issues.
NFRA is an independent regulator to oversee the auditing profession and accounting standards in India under Companies Act 2013.
The setting up of the NFRA, envisaged under the Companies Act, 2013, was approved by the Cabinet in May 2018.
After the Satyam scandal took place in 2009, the Standing Committee on Finance proposed the concept of the National Financial Reporting Authority (NFRA) for the first time in its 21st report.
Companies Act, 2013 then gave the regulatory framework for its composition and constitution.
- The Companies Act requires the NFRA to have a chairperson who will be appointed by the Central Government and a maximum of 15 members.

Functions and Duties of NFRA

Recommendatory Role:The body Recommend accounting and auditing policies and standards to be adopted by companies for approval by the Central Government.
Monitoring and Compliance: NFRA Monitor and enforce compliance with accounting standards and auditing standards.
Ensure Quality and Professionalism:This will Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service.
Ensuring Prevalence of Public Interest:This will Protect the public interest and the interests of investors, creditors and others associated with the companies or bodies.