The National Financial Reporting Authority (NFRA) has published draft requirements regarding preparation and publication of annual transparency report (ATR) by auditor and audit firms.
In accordance with Rule 8(2) of the NFRA Rule 2018, NFRA intends prescribing publication of ATR containing certain critical information about the auditor’s operational activities, management, governance and ownership structures, and policies and procedures necessary to deliver high-quality audits.
The move is aimed at enhancing the transparency about management and governance of audit firms and their internal policy framework to ensure high quality audits and preventing conflict of interest by maintaining independence.
NFRA has also decided to seek public comment and suggestions on the contents of the ATR by February 16, 2023.
The information contained in the ATR will be useful to investors, audit committees, independent directors and public at large.
The ATR requirements are proposed to be implemented in a gradual manner for entities starting with statutory auditors of top 1,000 listed companies (by market capitalisation) with effect from the financial year ending on March, 31 2023. The ATR has to be published within three months from the end of each financial year.