Significant Achievements of Financial Reporting Review Board for the Year 2014-15
1. 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 2014-15, the Board has decided:
To undertake review of general purpose financial statements:
Selected for the Council Year 2014-15
Selected Suo motto basis
The Board has selected 62 enterprises of Financial Year 2012-13 on suo-motto for review during the Council Year 2014-15. The annual reports of all these enterprises have been collected and assigned to the technical reviewers for their preliminary review. Till date, 46 Preliminary reports have been received from the technical reviewers out of which 43 reports have been assigned to Financial Reporting Review Groups for further review. The FRRGs have submitted the review report on 5 enterprises.
Selected as Special cases –
Two cases have been selected as special cases based on certain reports highlighting accounting irregularities in their financial statements have been received by the Board.
To complete the review of enterprises which were selected during the previous Council Year
The Board has also undertaken to complete the review of 185 enterprises, which were selected in the previous Council Years on suo- motto basis or as special cases. Out of these 185 cases, the Annual Reports of 181 enterprises have been received and the preliminary review of 167 enterprises has been completed. Out of these, the reports of 155 enterprises have been assigned to Financial Reporting Review Groups for further review. Till date the reports of 141 enterprises have been received and the Board has completed the review of 13 enterprises.
2. Supporting QARC of SEBI
In its endeavor to improve the quality of financial reporting by listed entities, the Securities and Exchange Board of India (SEBI), has set up the Qualified Audit Report Review Committee (QARC). Its role will be to guide SEBI in processing the qualified annual audit reports referred to it by the stock exchanges. The SEBI has sought support from ICAI-FRRB to assess the justifiability of the qualification in case if they find that the audit qualification is significant and explanation given by the listed entity is unsatisfactory. Based on the FRRB’s view, the QARC may even direct the entity to restate its Financial Results by way of proforma Financial Results to shareholders through Stock Exchanges.
The FRRB is associated with QARC for such reviews since Dec 2013 with a empanelled team of 47 reputed senior professional members across the country to undertake review of cases referred to it by QARC-SEBI. Till date, the Board has received 72 cases to review certain specific audit qualification as expressed by the auditors on the financial statements. The Board has considered audit qualifications of 37 cases alongwith additional information, if any received by the company and finalised its views on 30 cases. On 7 cases it has sought additional information from the enterprises and/or the auditor as the case may be. Remaining 35 cases received in the recent past are being reviewed by the Special Groups.
3. Review of audited accounts as referred by the Election Commission of India:
The Election Commission of India has referred the audited accounts of 36 political parties to the Institute which has been reviewed by the Board in its recent meeting on 11th and 12th June 2014. A Report on the observations of the Board would be shortly submitted to the Election Commission of India.
4. 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 has decided to organise Awareness Programmes on Financial Reporting Practices at various branches/Regional offices across the country. Till date 10 branches have approached the Board to organise the programme with them which are being taken forward. The Board endeavours to reach the members in every part of the country.