The National Financial Reporting Authority (NFRA), exercising its mandate under Section 132 of the Companies Act, 2013, has issued four inspection reports on 16th March 2026 in respect of leading audit firms, including entities from the “Big Four” network. These inspections are part of NFRA’s ongoing efforts to monitor compliance with auditing standards and enhance the overall quality of audit services in India.
The inspections involved a comprehensive review of both firm-level controls and engagement-level audit work. As part of the process, NFRA assessed the remedial actions undertaken by the firms in response to deficiencies identified in earlier inspection reports. Further, key elements of the firms’ system of quality control, such as human resources, consultation mechanisms, and monitoring processes, were evaluated to determine their effectiveness.
At the engagement level, NFRA reviewed selected audit assignments, focusing on critical audit areas such as revenue recognition and loans and advances, along with certain entity-specific components. The inspection process also included on-site visits, detailed discussions with audit firm personnel, and the examination of policies, procedures, and supporting documentation.
NFRA followed a structured process wherein initial observations were communicated to the audit firms, their responses were evaluated, and draft reports were shared before finalisation. The issuance of these reports highlights key audit quality concerns and reinforces the need for robust audit methodologies, stronger internal quality controls, and strict adherence to auditing and ethical standards.
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