Companies Bill 2011 Passed

in Lok Sabha Tonight

Constitution of  National Financial  Reporting Authority. (Very Imp for Us)

132. (1) The Central Government may, by notification, constitute a National Financial
Reporting Authority to provide for matters relating to accounting and auditing standards
under this Act.

(2) Notwithstanding anything contained in any other law for the time being in force,
the National Financial Reporting Authority shall—

(i) make recommendations to the Central Government on the formulation and
laying down of accounting and auditing policies and standards for adoption by
companies or class of companies or their auditors, as the case may be;

(ii) monitor and enforce the compliance with accounting and auditing standards
recommended by it in such manner as may be prescribed;

(iii) oversee the quality of service of the professions associated with ensuring
compliance with such standards, and suggest measures required for improvement in
quality of services and such other related matters as may be prescribed; and

(iv) perform such other functions as may be prescribed.

(3) The National Financial Reporting Authority shall consist of a chairperson, who
shall be a person of eminence and having expertise in accountancy, auditing, finance, business
administration, business law, economics or similar disciplines, to be nominated by the Central
Government and such other members not exceeding fifteen as may be prescribed:
Provided that the terms and conditions of appointment of the chairperson and members
shall be such as may be prescribed:
Provided further that the chairperson and members shall make a declaration to the
Central Government in the prescribed form regarding no conflict of interest or lack of
independence in respect of his or their appointment.

(4) Notwithstanding anything contained in any other law for the time being in force,
the National Financial Reporting Authority shall—
(i) have the power to investigate, either suo moto or on a reference made to it by
the Central Government, for such class of bodies corporate or persons, in such manner
as may be prescribed into the matters of professional or other misconduct committed
by any member or firm of chartered accountants, cost accountants or company
secretaries in practice consituted under the Chartered Accountants Act, 1949, the Cost
and Works Accountants Act, 1959 and the Company Secretaries Act, 1980 respectively
or any other profession as may be prescribed:

Provided that no other institute or body shall initiate or continue any proceedings
in such matters of misconduct where the National Financial Reporting Authority has
initiated an investigation under this section;

(ii) have the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908, while trying a suit, in respect of the following matters, namely:—

(a) discovery and production of books of account and other documents,
at such place and at such time as may be specified by the National Financial
Reporting Authority;

(b) summoning and enforcing the attendance of persons and examining
them on oath;

(c) inspection of any books, registers and other documents of any person
referred to in clause (b) at any place;
(d) issuing commissions for examination of witnesses or documents;
(iii) where professional or other misconduct is proved, have the power to make
order for—
(a) imposing penalty of not less than one lakh rupees in case of individuals
and not less than ten lakh rupees in case of firms;
(b) debarring the member or the firm from engaging himself or itself from
practice as member of the institute for a minimum period of six months or for such
higher period not exceeding ten years as may be decided by the National Financial
Reporting Authority:
Provided that the Appellate Authority constituted under section 22A of
the Chartered Accountants Act, 1949, under section 22A of the Cost and Works
Accountants Act, 1959 and under section 22A of the Company Secretaries
Act, 1980 shall be deemed to the appellate authority against any order made by
the National Financial Reporting Authority and any person aggrieved by any
order of the National Financial Reporting Authority shall have the right to appeal
before the appellate authority in such manner as may be prescribed.
Explanation.—For the purposes of this section, the expression “professional or other
misconduct” shall have the same meaning respectively assigned to it under section 22 of the
Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the
Company Secretaries Act, 1980.

(5) The National Financial Reporting Authority shall meet at such times and places and
shall observe such rules of procedure in regard to the transaction of business at its meetings
in such manner as may be prescribed.

(6) The Central Government may appoint a secretary and such other employees as it
may consider necessary for the efficient performance of functions by the National Financial
Reporting Authority under this Act and the terms and conditions of service of the secretary
and employees shall be such as may be prescribed.

(7) The head office of the National Financial Reporting Authority shall be at New Delhi and
the National Financial Reporting Authority may, meet at such other places in India as it deems fit.

(8) The National Financial Reporting Authority shall cause to be maintained such
books of account and other books in relation to its accounts in such form and in such manner
as the Central Government may, in consultation with the Comptroller and Auditor-General of
India prescribe.

(9) The accounts of the National Financial Reporting Authority shall be audited by the
Comptroller and Auditor-General of India at such intervals as may be specified by him and
such accounts as certified by the Comptroller and Auditor-General of India together with the
audit report thereon shall be forwarded annually to the Central Government by theNational
Financial Reporting Authority.

(10) The National Financial Reporting Authority shall prepare in such form and at
such time for each financial year as may be prescribed its annual report giving a full account
of its activities during the financial year and forward a copy thereof to the Central Government
and the Central Government shall cause the annual report and the audit report given by the
Comptroller and Auditor-General of India to be laid before each House of Parliament.