Supreme Court's Decision on NFRA Proceedings

The Supreme Court has recently made a significant decision allowing the National Financial Reporting Authority (NFRA) to continue its proceedings against chartered accountants and firms. This decision comes in cases where audit quality review reports have not been prepared and final orders are yet to be passed.

Details of the Hearing

During the hearing, a bench comprising Chief Justice Sanjiv Khanna and Justice Sanjay Kumar instructed NFRA not to issue final orders in these ongoing cases. Additionally, it was stated that any final orders that have already been passed will not be implemented.

NFRA's Appeal to the Supreme Court

NFRA had approached the Supreme Court challenging an order by the Delhi High Court. The High Court had raised concerns regarding NFRA's failure to establish separate divisions for audit quality review and disciplinary actions, prompting a request for a fresh evaluation in 11 cases.

Legal Precedents Cited

In its appeal, NFRA referenced a Supreme Court judgment in the T K Harish case, which involved a branch auditor of DHFL. This case is notable for its investigation into the siphoning off of Rs 31,000 crore of public money and a bank fraud amounting to Rs 3,700 crore, currently being looked into by other law enforcement agencies.

Implications of the Supreme Court's Decision

The Supreme Court's decision highlights the ongoing challenges in ensuring audit quality and accountability among chartered accountants and firms. It underscores the importance of regulatory bodies like NFRA in maintaining financial integrity and transparency in the corporate sector.