Significant Achievements of Financial Reporting Review Board for the Year 2018-19
Significant Achievements Council Year 2018-19
The Financial Reporting Review Board (FRRB) is playing a paramount role in improving the financial reporting practices prevailing in India. The Board reviews the general-purpose financial statements of various enterprises with a view to determine, to the extent possible, compliance with the generally accepted accounting principles in preparation and presentation of financial statements, compliance with the disclosure requirements prescribed by regulatory bodies, statutes/rules and regulations relevant to the enterprise and compliance with the reporting obligations of the enterprise as well as the auditor. In its endeavors to improve financial reporting practices, the Board supports various regulators viz Qualified Audit Report Review Committee of Securities and Exchange Board of India (SEBI) in review of significant audit qualifications of the listed enterprises, Election Commission of India (ECI) in review of annual audited accounts of political parties and undertakes review of other cases as referred by the regulators time to time.
SIGNIFICANT INITIATIVES / ACHIEVEMENTS
Partner in Nation Building- Supporting Regulators
Meeting with Chairperson, National Financial Reporting Authority(NFRA)
To understand the scope and procedure of FRRB NFRA had requested for a meeting. Accordingly, a meeting was held with Shri R. Sridharan, Chairperson NFRA and Shri Prasenjit Mukherjee, member NFRA. The Chairman, FRRB gave a presentation about the overview of FRRB, outlining its scope, procedure, contribution as well as the ways in which FRRB has supported various regulators from time to time. Also, informed the number of instances where irregularity/ non-compliances observed by the FRRB has been sent to the regulatory body relevant to the enterprise. Chairperson NFRA, appreciated the presentation given by the Chairman, FRRB and requested the copy of the same alongwith the copies of the recent publication of FRRB.
Status of review of cases referred by Regulators
In its endeavour to support regulators as well as to bring transparency in financial reporting, the FRRB is constantly working on cases referred by MCA, SEBI, ECI, or any other regulator. The significant assignments worked upon by the Board during the year are as follows:
- Election Commission of India has requested FRRB to undertake review of the annual audited accounts of at least six National political parties and recognized parties with income/ expenditure exceeding Rs. 10 Crore. Accordingly, the Board has undertaken the review of 9 annual audited accounts of political parties, pertaining to financial year 2016-17. The Board has also undertaken review of 9 annual audited accounts of political parties, pertaining to financial year 2017-18 as referred by ECI during the year. The Board has considered 12 annual audited accounts of political parties, 8 pertaining to financial year 2016-17 and 4 pertaining to financial year 2017-18 and decided to issue advisory to the auditors of concerned parties.
- The Board has also undertaken as special cases review of 13 general purpose financial statement and auditor’s reports thereon of various enterprises as referred by Ministry of Corporate Affairs and Securities and Exchange Board of India, based on media reports and other references received.
Shell Companies Review Group (under FRRB)
As suo motto proactive measure and in view of public interest and importance of matter; the Council has constituted a Shell Companies Review Group (SCRG) under Financial Reporting Review Board (FRRB) of the Institute. The SCRG will be undertaking the review of shell companies on references received from Regulatory / Government bodies like ‘Task Force on Shell Companies’ of GOI etc. The SCRG will review and refer the shell companies to FRRB, for detailed review of the general purpose financial statements and Auditor’s report thereon with a view to determine, to the extent possible:
- compliance with the generally accepted accounting principles in the preparation and presentation of financial statements;
- compliance with the disclosure requirements prescribed by regulatory bodies, statutes and rules and regulations relevant to the enterprise; and
- compliance with the reporting obligations of the auditor.
Total Cases reviewed during the year
|Cases considered and finalised by the Board||Cases referred to Director (Discipline) of ICAI for further action where serious non-compliances observed||Cases referred to Regulators (MCA, SEBI)||Issued advisories to the auditors|
- The cases completed during the year include review of 14 financial statements undertaken as special cases and 12 financial statements of various political parties.
- The Board will be taking up the review of financial statements of 161 enterprises selected on suo motto basis or as special case. Out of these, the preliminary review of 156 enterprises (Tier I) has been completed by technical reviewers and review of 143 enterprises (Tier II) has been completed by Financial Reporting Review Groups.
Conduct of the 100th meeting of FRRB
The FRRB conducted its 100th meeting on January 23, 2019 at ICAI Bhawan, New Delhi. On this occasion, the Board organised a webcast on that day for the Technical Reviewers and Group members. The Chairman, FRRB and Vice Chairman, FRRB acknowledged their contribution as well as appraised them about critical aspects in the review process and with the way forward of the Board. Some of the Central Council Members, Technical Reviewers and Group members from across the country attended the webcast. The webcast received wide appreciation from the attendees.
Further, in order to acknowledge the contribution and efforts of past as well as present Board members, a felicitation event was also organised. CA. Naveen N. D. Gupta, President, ICAI, CA. Prafulla P. Chhajed, Vice President, ICAI, CA. T. S. Vishwanath, Former President, ICAI, CA. N.D. Gupta, Former President, ICAI and Honourable member of Rajya Sabha, CA. Amarjit Chopra, Former President, ICAI, CA. Jayant P. Gokhale, CA Vinod Jain, CA. Babu Abraham Kallivayalil, Former Chairmen of the Board graced the event with their benign presence and shared words of wisdom, the event was also graced by some council member, Technical Reviewers and the members of the Financial Reporting Review Groups.
Publication: Article in Journal
With a view to apprise the members of the Institute and others concerned about the non-compliances observed during the review, it was decided to start a series ‘Non-Compliance with Reporting Obligations’ pertaining to various Accounting Standards. In this direction, an article on Accounting Standard 1 (AS) 1: Disclosure of Accounting Policies has been published in the Institute’s Journal, ‘The Chartered Accountant’, in the issue of November 2018.
Training Programmes / Workshops
Seminar for Preparers and Auditors of the Financial Statements
The Board also organised a ‘Seminar for Preparers and Auditors of the Financial Statements’ on July 14, 2018 at New Delhi, which was hosted by NIRC of ICAI. The objective of this seminar was to share the experience with the preparers and auditors of the financial statements about various non-compliances observed by the Board during the course of review of financial statements. The Programme was inaugurated by President, ICAI and Shri V. Kurian, Ex- DG (Commercial) C&AG, who enlightened the participants by sharing their enriching experience with them. With the view to identify the issues and challenges pertaining to financial reporting, a panel discussion was also held, wherein CFOs of renowned corporates as well as experienced members in practice were invited to share their views on the subject. The programme was well attended by 176 members and was highly appreciated by the participants and faculties.
2 Day Training Programme for Technical Reviewers and FRRG Members
To update the Technical Reviewers (TRs) and members of Financial Reporting review Group (FRRGs) on Ind ASs and equip them with the necessary skills required to review the Ind AS based financial statements a ‘2 Day Residential Workshop for Technical Reviewers and FRRG Members’ was organized by FRRB. A Workshop for the TRs and FRRGs in Eastern & Southern region was conducted last year and this time reviewers from the Central and Northern Region were invited to attend the programme. The main objective of organizing such workshops is to further strengthen the review mechanism and to acquaint TRs and FRRGs with major non-compliances observed by the Board.
Awareness Programme on Financial Reporting Practices
To enhance the knowledge of members with the changes made in financial reporting framework as well as to apprise them about the common non-compliances observed by the Board during review of various financial statements, Awareness Programmes on ‘’Financial Reporting Practices’’ have been organized by FRRB at Gurugram, Kolkata, Ludhiana, Chandigarh. In Gurugram and Kolkata, it was attended by 156 members and 113 members respectively and in Ludhiana-Chandigarh, it was well attendant by 150 members in each city.