Significant Achievements of Financial Reporting Review Board for the Year 2013-14
1. INITIATIVES FOR PROFESSION: Working for Building Blocks
A. Strengthening Review Mechanism and Quality Control
ICAI through FRRB reviews the quality of financial reporting practices followed by their members and the corporates by undertaking review of the financial statements and auditors report thereon of various enterprises. During the Council Year 2013-14, the Board has decided:
To undertake review of general purpose financial statements:
Selected for the Council Year 2014-15
In order to expedite the review process of the Council year 2014-15, the Board has selected, on suo motto basis, the general-purpose financial statements and auditors’ reports thereon of 62 enterprises pertaining to financial year 2012-13. Till date the Annual Reports of 55 enterprises have been collected which have been allocated to technical reviewers for preliminary review.
Selected for the Council Year 2013-14
Selected Suo motu – 76 enterprises
Selected as Special cases –
Two Cases relating to eight financial statements as referred by SEBI: The Board has completed the review of a case referred to it by the SEBI pertaining to five financial years as a special case which the SEBI has requested for review as per FRRB’s terms of reference, scope and functions. A report on the same has been prepared and sent to SEBI as well as Director (Discipline). Meantime, one more case has also been referred by SEBI which the Board has selected for review for three financial years.
Other five cases relating to thirteen financial statements selected, based on certain media reports/ other facts highlighting accounting irregularities/financial frauds.
In order to accomplish the review of aforesaid cases, so far, technical review of 80 enterprises has been completed and the preliminary review reports of 79 enterprises have been assigned to Financial Reporting Review Groups (FRRGs) for further review. The FRRGs have submitted the review report on 58 enterprises, out of which the Board has completed the review of 23 enterprises.
To complete the review of enterprises which were selected during the previous Council Year
Selected Suo motu– 152 Enterprises
Selected as Special cases – 5 enterprises
So far the technical review of 154 enterprises has been completed which have been assigned to Financial Reporting Review Groups (FRRGs) for further review. The FRRGs have submitted the review report on 137 enterprises and the Board has completed the review of 27 enterprises.
B. Awareness Programmes
To enhance the knowledge of the preparers of the financial statements and auditors and to update them about the changes made in accounting standards as well as auditing standards issued by the Institute and/or other regulatory authorities, the Board is organising Awareness Programmes on Financial Reporting Practices at various branches/Regional offices across the country. During the Council year, 10Awareness Programmes have been organised at Hyderabad, Thane, Guntur, Vishakhapatnam, Nagpur, Jodhpur, Mumbai , Chennai , Pune and Bangalore which were attended by approximately 2330 participants.
C. Important Decisions/ Initiatives/ Developments:
Empanelment of Technical Reviewers
During the Council Year 2013-14, 23 additional members of the Institute have been empanelled on the Board, thereby, empanelling a total number of 387 Technical Reviewers on the Board.
2. PARTNER-IN- NATION BUILDING INITIATIVES: Executing Responsibilities
(A) Role assigned to ICAI-FRRB by SEBI:
In its endeavor to improve the quality of financial reporting by listed entities, SEBI has sought support from ICAI-FRRB. The Securities and Exchange Board of India (SEBI), has decided to set up a new Qualified Audit Report Review Committee (QARC). The QARC among other members will comprise the representatives of the ICAI and the stock exchanges. Its role will be to guide SEBI in processing the qualified annual audit reports referred to by the stock exchanges. FRRB has been assigned the role to assess the materiality of the qualification contained in auditor’s report, based on which QARC may even direct the entity to restate its books of accounts. In order to smoothly accomplish the new role assigned to ICAI-FRRB, a separate operating procedure for undertaking the assigned task has been laid down. As per the said procedure, the review of such cases will be conducted by a Special Group. A separate Panel of Reviewers is being formed by the Board from which the empanelled members can be appointed on Special Group to undertake the review of cases referred to it by SEBI’s QARC. So far 29 members have been empanelled in the special group.
The QARC of SEBI has started referring the cases to the FRRB on which it is replying within given time frame. ICAI’s FRRB endeavours to support SEBI to bring transparency in financial reporting.
Appointment of ICAI Representative as Chairman of Qualified Audit Review Committee
The SEBI has decided to appoint the representative from ICAI as the Chairman of the Qualified Audit Review Committee of SEBI which would also include representatives of BSE, NSE, MCX and SEBI itself. Accordingly, Chairman, Financial Reporting Review Board has been appointed as Chairman of the Committee.
(B) Review of Special cases assigned by SEBI:
The Board has completed the review of a case referred to it by the SEBI pertaining to five financial years as a special case which the SEBI has requested for review as per FRRB’s terms of reference, scope and functions. A report on the same has been prepared and sent to SEBI as well as Director (Discipline).
Meantime, one more case has also been referred by SEBI which the Board has selected for review for three financial years. The preliminary review of the same has also been initiated.
3. PUBLICATIONS: Sharing knowledge, Skills and Competence
In order to enhance the knowledge of preparers of the financial statements and auditors, the next volume of publication ‘A Study on Compliance of Financial Reporting Requirements’ is under preparation and is expected to be released in the current Council Year. The Publication will contain pertinent observations of the Board on compliance aspects of various Financial Reporting Requirements in context of the applicable Accounting / Auditing Standards and Guidance Notes as well as relevant Laws and Statutes.