Financial Reporting Review Board
Financial Reporting Review Board (FRRB or the Board) is a non-standing committee of the Council of the Institute of Chartered Accountants of India. The FRRB was constituted by the Council at its 226th meeting held in July 2002.
OBJECTIVE OF FRRB
The objective of the Board is to review the compliance, inter alia, with the accounting and auditing standards issued by the ASB and AASB of the Institute of Chartered Accountants of India. It is envisaged that the reviews carried out by the Board, in the long-run would improve the overall quality of works executed by the members of the profession.
The Board, however, restricts its reviews to the published general-purpose financial statements only. It is also clarified here that the reviews by the Financial Reporting Review Board would not be verification of the entire audit (re-audit) or review of working papers of the auditors concerned.
SCOPE AND FUNCTIONS
The FRRB reviews the general-purpose financial statements of certain enterprises with a view to determine, to the extent possible:
a) Compliance with the generally accepted accounting principles in the preparation and presentation of financial statements;
b) Compliance with the disclosure requirements prescribed by regulatory bodies, statutes and rules and regulations relevant to the enterprise;
c) Compliance with the reporting obligations of the enterprise as well as the auditor.
SELECTION AND REVIEW
The FRRB reviews the general-purpose financial statements either suo motto or on a reference made to it by any regulatory body like, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Ministry of Corporate Affairs etc.
The FRRB also reviews the general-purpose financial statements of enterprises relating to which serious accounting irregularities in the general-purpose financial statements have been highlighted by the media reports.
IMPLICATIONS AND ACTIONS
Findings of the FRRB relating to non-compliance with the factors stated would form the basis for initiating action against the auditor under the Chartered Accountants Act, 1949.
As far as the management of the enterprise is concerned, pending the grant of relevant powers to the FRRB by the Government of India, the FRRB would consider informing the irregularity to the regulatory body relevant to the enterprise.
PURVIEW OF FRRB
The enterprises within the purview of the FRRB
- Entities whose equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or outside India.
- Banks (including co-operative banks), financial institutions or entities carrying on insurance business.
- All commercial, industrial and business reporting entities, whose turnover (excluding other income) exceeds rupees 50 crore in the immediately preceding accounting year.
- Holding and subsidiary entities of any one of the above.
- Such other category of enterprises which in the opinion of the Board make the public interest vulnerable due to susceptibility to
a) Non-compliance of generally accepted accounting principles in the preparation and presentation of financial statements,
b) Non-compliance of the disclosure requirements prescribed by regulatory bodies, statutes and rules and regulations relevant to the enterprise
c) Non-compliance of the reporting obligations of the enterprise and the auditor.
MATTERS SUBJECT TO CLARIFICATIONS
There could be accounting and auditing issues that may require a clarification. The FRRB does not have any power to issue such clarifications. However, if the FRRB is of the opinion that the issue requires a clarification, it may refer the issue to the appropriate committee of the Council for consideration.
Disclaimer: The information contained in this article is based on knowledge obtain from ICAI Publications. It is provided for general guidance to the intended user. I recommend that professional advice is necessary before taking any action on the basis of the article provided.
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