The National Financial Reporting Authority (NFRA), under its mandate prescribed in Section 132 of the Companies Act, 2013, has issued six new inspection reports on Chartered Accountant firms as part of its audit quality inspection initiative.
Section 132 entrusts NFRA with the responsibility of monitoring compliance with auditing and accounting standards, overseeing the quality of professional services, and recommending measures for improvement. In line with this mandate, NFRA commenced its latest round of audit quality inspections in March 2025, following the procedures laid down in the NFRA Rules, which include evaluation of auditors’ quality control systems and documentation practices.
The primary objective of these inspections is to assess whether audit firms are complying with regulatory and professional requirements and whether their quality control systems are adequate and effective. This includes evaluating the governance framework of firms, the effectiveness of internal controls over audit quality, and the processes for identifying and mitigating audit risks.
The inspection process involves a review of quality control policies, focused examination of key areas, and test checks of both quality control processes and selected audit engagements carried out during the year.
It is important to note that these inspections are intended to identify areas for improvement in audit firms’ quality control systems. They are not designed to provide a comprehensive review of all aspects of a firm’s operations, nor to identify every weakness in audit execution. Similarly, the inspection reports are not meant to serve as ratings or marketing tools, but rather as a mechanism to enhance overall audit quality and professional standards.
Click the link below to access the inspection reports:
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