| Syllabus: GS-III; Subject: Economy, Topic: Industry and Industrial policies |
Context: The National Financial Reporting Authority (NFRA) plans to set up an Innovation Lab for advanced auditing techniques.
 NFRA’s Initiatives:
- Establishment of an Innovation Lab for advanced auditing techniques.
- Engagement with Audit Committees and Independent Directors during inspections.
- Embracing technology for fraud detection and identification of related party transactions (RPTs).
- Advocacy for professional skepticism and the ‘Trust but Verify’ approach among auditors.
- Push for global convergence in reporting and assurance standards.
| National Financial Reporting Authority (NFRA):·       Established: October 1, 2018, under the Companies Act, 2013.
ü Role: Independent regulator overseeing auditing profession and accounting standards in India. ü Objective: To enhance the quality of corporate financial reporting. Functions: 1.    Recommending accounting and auditing policies and standards. 2.   Monitoring and enforcing compliance with standards. 3.   Improving the quality of service in compliance-related professions. Composition: Chairperson and up to fifteen members, appointed by the Central Government. Powers: 4.   Authority to investigate professional misconduct. 5.   Empowered with civil court-like powers for investigations. |
