Significant Achievements of Financial Reporting Review Board for the Year 2019-20
FINANCIAL REPORTING REVIEW BOARD
The Financial Reporting Review Board (FRRB) is playing a paramount role in improving the financial reporting practices prevailing in India. The FRRB (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. The Board also supports various regulators viz Election Commission of India (ECI) in the review of annual audited accounts of political parties and undertakes the review of cases as referred by Ministry of Corporate Affairs (MCA), Securities and Exchange Board of India (SEBI) and other regulators from time to time.
1. Partner in Nation Building- Supporting Regulators - Review of cases referred by Regulators
In its endeavour to support regulators as well as to bring transparency in financial reporting, the FRRB is working on cases referred by MCA, SEBI, ECI, or any other regulator. The significant assignments undertaken 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 7 annual audited accounts of political parties, as referred by ECI from time to time.
- The Board has also undertaken as special cases review of 14 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.
2. Cases reviewed during this period
The Board has completed review of 64 financial statements among other agendas. Out of these 64 cases, 11 cases have been referred to relevant regulators and Director (Discipline) for further action and in 43 cases, Board decided to issue advisory to the auditor of the enterprise.
|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 period include review of 20 financial statements undertaken as special cases and 9 Ind-AS Financial Statements.
- The Board will be taking up the review of financial statements of 108 enterprises selected on suo motto basis or as special case. Out of these, the preliminary review of 102 enterprises (Tier I) has been completed by technical reviewers and review of 89 enterprises (Tier II) has been completed by Financial Reporting Review Groups
3. Webcast on Commonly found Non-Compliances
To enhance the knowledge of members on review skill as well as the latest developments taking place in accounting standards, standards on auditing and other financial reporting requirement, the Board initiated to organize series of webcasts on commonly found non-compliances observed in the financial statements by the Board on regular basis. In view of the same, 9 Live Webcasts were organized on Commonly Found Non-compliances on AS 15, AS 3, AS 2, AS 18, Companies Act, 2013, AS 22, CARO, AS 5, AS 9, AS 11, AS 20, AS 13 and AS 26 and were well attended by members.
4. 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, the Board initiated a series of articles in journal regarding ‘Non-Compliance with various Reporting Obligations’. In view of the same, 8 articles on ‘Non-Compliance with Reporting Obligations’ have been published in the Institute’s Journal, ‘The Chartered Accountant’, in the issue of April, 2019, May 2019, June 2019, August 2019, September 2019, October 2019, November 2019 and December 2019. These articles covered Board’s observation pertaining to AS 2: Inventories, AS 3: Cash Flow Statement, AS 15: Employee Benefits, AS 18: Related Party Disclosures, AS 22: Accounting for Taxes on Income, Companies (Auditor’s Report) Order, AS 5: Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies, AS 9: Revenue Recognition, AS 11: The Effects of Changes in Foreign Exchange Rates, AS 20: Earning per Share, AS 13: Accounting for Investments and AS 26: Intangible Assets. We are pleased to inform that the content under FRRB Update (in ICAI Journal) was well received by the readers.