NFRA's Auditor-Audit Committee Interaction Series
The National Financial Reporting Authority (NFRA) has launched the first part of its Auditor-Audit Committee Interaction Series aimed at enhancing communication between auditors and audit committees, thereby improving audit quality.
Importance of Communication
- NFRA emphasizes the significance of communication between auditors and those charged with governance (TCWG).
- The initiative draws on requirements from various standards and the Companies Act, 2013.
Key Focus Areas
- Auditors should be prepared for questions on:
- Accounting estimates and judgments.
- Audit of expected credit losses as per Ind AS 109, Financial Instruments.
- Enhancement of audit quality and promotion of accounting and auditing standards.
Effective Two-Way Communication
- NFRA Chairman highlighted the need for robust interaction between TCWG and auditors.
- Audit committees and independent directors should:
- Ask auditors pertinent questions.
- Maintain professional skepticism.
- Not accept information passively.
Such communication is expected to enhance stakeholder and shareholder confidence in corporate financial statements.