SDG 16: Peace, Justice & Strong Institutions | SDG 17: Partnerships for the Goals
Institutions: National Financial Reporting Authority | Ministry of Corporate Affairs
The National Financial Reporting Authority (NFRA) has released Auditor-Audit Committee Interaction Series 4, focusing on audit of accounting estimates and judgments, especially impairment of non-financial assets under Ind AS 36 and SA 540. The guidance is meant to strengthen auditors’ communication with Audit Committees (the board segment charged with governance).
This release responds to NFRA’s observations in its enforcement and monitoring roles, which flagged gaps in how auditors and governance bodies engage - particularly in challenging accounting areas. The document includes suggested questions that Audit Committees or Boards might ask auditors about impairment, judgments, estimation uncertainties, and related disclosures.
By clarifying expectations around estimation, judgment, and impairment, this guidance helps enhance audit quality and financial reporting transparency, especially for listed and large entities. It also supports investor protection by reducing ambiguity in financial statements.
What is NFRA? → The National Financial Reporting Authority is India’s independent regulator for auditing and accounting, established in 2018 under the Companies Act, 2013. It works under the Ministry of Corporate Affairs. NFRA oversees auditors of listed and large companies, sets auditing standards, monitors compliance, and can investigate and penalise audit firms. Its mandate is to improve audit quality, enhance financial reporting credibility, and protect investors.
What is “Impairment of Non-Financial Assets”? → When assets such as property, plants, machinery, or intangible assets lose value and their carrying amount must be written down. Auditors need to assess and challenge assumptions around future cash flows and discount rates.
Follow the full news here: PIB – NFRA releases Auditor-Audit Committee Interaction Series 4