# National Financial Reporting Authority (NFRA) — Section 132
NFRA is the apex regulator that oversees auditors of certain classes of companies, ensures audit quality, and enforces accounting & auditing standards.
## 1. Powers of NFRA
NFRA has the same powers as a civil court in respect of:
| Power | Scope |
|---|---|
| Summoning & enforcing attendance | Of any person, examination on oath |
| Discovery & production | Of books, registers, documents |
| Inspection | Of any books or registers at any place |
| Issuing commission | For examination of witnesses |
## 2. Punishment where misconduct is proved
Where professional or other misconduct is proved, NFRA may pass an order:
### (a) Penalty
| Type | Minimum | Maximum |
|---|---|---|
| Individual | ₹1 lakh | 5 × fees received |
| Firm | ₹5 lakh | 10 × fees received |
### (b) Debarring from practice
The member/firm may be debarred from being appointed as auditor or internal auditor or doing valuation for a period of:
- Minimum: 6 months
- Maximum: 10 years (as NFRA may decide)
## 3. Appeal
Any person aggrieved by an order of NFRA → Appeal to NCLAT (National Company Law Appellate Tribunal).
## 4. Classes of Companies / Bodies Corporate governed by NFRA
NFRA may investigate auditors of the following:
1. Listed companies — listed on any stock exchange in India or outside India.
2. Unlisted Public Companies (UPCs) having on 31.03 of immediately preceding FY any of:
- Paid-up share capital ≥ ₹500 crore, OR
- Turnover ≥ ₹1,000 crore, OR
- Aggregate of outstanding loan, debenture or deposit ≥ ₹500 crore.
3. Insurance, Banking, Electricity companies or companies governed by a Special Act.
4. Any Body Corporate or company on a reference made by Central Government in public interest.
5. Body Corporate incorporated outside India which is a subsidiary / associate of any of the above, if income or networth of such subsidiary/associate exceeds 20% of the consolidated income / networth.
> If a company falls below the threshold for 3 consecutive years, NFRA stops governing it.
## 5. Additional points
- Head office of NFRA — New Delhi.
- Books of account — kept in form as prescribed.
- Audit — by Comptroller & Auditor General (C&AG).
- Annual report for each FY → placed before both Houses of Parliament.
## 6. Reporting to NFRA
### (i) Auditor of company governed by NFRA
- Within 15 days of appointment, the auditor shall file a return (Form NFRA-1) intimating NFRA of his appointment.
### (ii) Every body corporate in India
- Shall file a return with NFRA on or before 30th November each year.
Memory Hook — Companies under NFRA: "Listed + Big UPC + Special Act + CG reference + Foreign subsy (>20%)"