Constitution of National Financial Reporting Authority
Section 132 of the Companies Act, 2013 deals with constitution of National Financial Reporting Authority. The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act. The Act came into force on 01 Apr 2014.
(1) The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act.
1[(1A) The National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.]
(2) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall--
(a) make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;
(b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;
(c) over see the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed; and
(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.
(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance or law to be appointed by the Central Government and such other members not exceeding fifteen consisting of part-time and full-time members as may be prescribed:
Provided that the terms and conditions and the manner of appointment of the chairperson and members shall be such as may be prescribed:
Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their appointment:
Provided also that the chairperson and members, who are in full-time employment with National Financial Reporting Authority shall not be associated with any audit firm (including related consultancy firms) during the course of their appointment and two years after ceasing to hold such appointment.
2[(3A) Each division of the National Financial Reporting Authority shall be presided over by the Chairperson or a full-time Member authorized by the Chairperson.
(3B) There shall be an executive body of the National Financial Reporting Authority consisting of the Chairperson and full-time Members of such Authority for efficient discharge of its functions under sub-section (2) [other than clause (a) and sub-section (4).]
(4) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall--
(a) have the power to investigate, either suo motu or on a reference made to it by the Central Government, for such class of bodies corporate or persons, in such manners may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949 (38 of 1949):
Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section;
(b) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:--
(i) discovery and production of books of account and other documents, at such place and at such time as may be specified by the National Financial Reporting Authority;
(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii) inspection of any books, registers and other documents of any person referred to in clause (b) at any place;
(iv) issuing commissions for examination of witnesses or documents;
(c) where professional or other misconduct is proved, have the power to make order for--
(A) imposing penalty of--
(I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and (II) not less than 2[five lakh rupees], but which may extend to ten times of the fees received, in case of firms;
3[(B) debarring the member or the firm from--
I. being appointed as an auditor or internal auditor or undertaking any audit in respect t of financial statements or internal audit of the functions and activities of any company or body corporate; or
II. performing any valuation as provided under section 247,
for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.]
Explanation.--For the purposes of this sub-section, the expression "professional or other misconduct" shall have the same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949 (38 of 1949).
(5) Any person aggrieved by any order of the National Financial Reporting Authority issued under clause (c) of sub-section (4), may prefer an appeal before 4[the Appellate Tribunal in such manner and on payment of such fee as may be prescribed].
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(10) The National Financial Reporting Authority shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings in such manner as may be prescribed.
(11) The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed.
(12) The head office of the National Financial Reporting Authority shall be at New Delhi and the National Financial Reporting Authority may, meet at such other places in India as it deems fit.
(13) The National Financial Reporting Authority shall cause to be maintained such books of account and other books in relation to its accounts in such form and in such manner as the Central Government may, in consultation with the Comptroller and Auditor-General of India prescribe.
(14) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and such accounts as certified by the Comptroller and Auditor-General of India together with the audit report thereon shall be forwarded annually to the Central Government by the National Financial Reporting Authority.
(15) The National Financial Reporting Authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.
Section 132, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Adarsh Ranka v. Union of India & Ors.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Deloitte Haskins & Sells LLP v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Rukshad Daruvala v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Udayan Sen v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Shrenik Baid v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Jayesh Gandhi v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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S R B C & Co LLP v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Vinayak Pujare v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Ravi Bansal v. Union of India & Anr.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
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Federation of Chartered Accountants Association v. Union of India & Ors.
Court's Decision & Legal Precedent
Section 132 of the Companies Act, 2013 and the NFRA Rules are constitutionally and statutorily valid; however, the same NFRA complement that prepares an Audit Quality Review Report cannot initiate or decide disciplinary action under s.132(4)/Rule 11 — separation of the AQRR/audit-review function from the disciplinary-initiation body is mandatory; SCNs and final orders issued without that separation are quashed, with liberty for fresh proceedings by an independent NFRA complement.
On this section: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… and which is viewed as empowering the NFRA to initiate disciplinary proceedings not just against individual partners and CAs' but also auditing firms in respect of any audit that may have been conducted including those commenced and concluded prior to the introduction of that provision in the Companies Act. 5. Section 132 came to be incorporated in the Companies Act by virtue of Act 18 of 2013 and came to be operationalized in terms of a notification issued on 01 October 2018. In terms of that notification, the Union Government designated the said date as the point of commencement as well as the date of constitution of the NFRA. It …
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… and which is viewed as empowering the NFRA to initiate disciplinary proceedings not just against individual partners and CAs' but also auditing firms in respect of any audit that may have been conducted including those commenced and concluded prior to the introduction of that provision in the Companies Act. 5. Section 132 came to be incorporated in the Companies Act by virtue of Act 18 of 2013 and came to be operationalized in terms of a notification issued on 01 October 2018. In terms of that notification, the Union Government designated the said date as the point of commencement as well as the date of constitution of the NFRA. It …
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… and which is viewed as empowering the NFRA to initiate disciplinary proceedings not just against individual partners and CAs' but also auditing firms in respect of any audit that may have been conducted including those commenced and concluded prior to the introduction of that provision in the Companies Act. 5. Section 132 came to be incorporated in the Companies Act by virtue of Act 18 of 2013 and came to be operationalized in terms of a notification issued on 01 October 2018. In terms of that notification, the Union Government designated the said date as the point of commencement as well as the date of constitution of the NFRA. It …
Made under this section, and citing it
18 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
- G.S.R NO. 624(E) Companies Accounts Fourth Amendment Rules 2022 dated 05.08.2022Rule 2022
- GS.R 456(E) Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2022 dated 17.06.2022Rule 2022
- CARO 2020 dated 25.02.2020Order 2020
- GSR 125 dt 18.2.2019 Terms and Conditions of Selection Committee NFRA rulesRule 2019
- NFRA Amendement Rules 2019Rule 2019
- National Financial Reporting Authority (Meeting for Transaction of Business) Rules, 2019Rule 2019
- Commencement NotificationNotification 2018
- Commencement notificationNotification 2018
- Commencement notification dated 24.10.2018Notification 2018
- Constitution of NFRANotification 2018
- GSR No. 262 (E) dated 21/03/2018Rule 2018
- National Financial Reporting Authority Rules(NFRA) 2018Rule 2018
- SO 1316 (E) dated 21.03.2018Notification 2018
- SO 5099 (E) dated 01.10.2018Notification 2018
- SO 5848 (E) dated 28.11.2018Notification 2018
- SO 5849 (E) dated 28.11.2018Notification 2018
- The National Financial Reporting Authority (Manner of Appointment and other Terms and Conditions of Service of Chairperson and Members) Rules, 2018 dated 21.03.2018.Rule 2018
- G.S.R. 369 dt. 16.5.2019 NFRA (Recruitment, Salary, Allowances and Other Terms and Conditions of srvice of Secretary, Officers and Other Emplyees of Authority) Rules, 2019Rule 2009
Another 9 instruments name this provision in its title or its text without being made under it.
- Companies (Accounting Standards) Rules, 2021Rule 2021
- SO 1068 (E) dated 28.02.2019Notification 2019
- SO 1068 dt.28.2.2019 (notification of Part time Member, NFRA)Notification 2019
- National Advisory Committee on Accounting StandardsNotification 2017
- Companies (Removal of Difficulties) 2nd Order, 2016Order 2016
- Companies (Removal of Difficulties) First Order, 2016Order 2016
- National Advisory Committee on Accounting StandardsNotification 2016
- Chapter IX - The Companies (Accounts) Rules, 2014.Rule 2014
- Notification for National Advisory Committee on Accounting StandardsNotification 2014
Questions about Section 132
What have the courts held on Section 132 of the Companies Act?
Adarsh Ranka v. Union of India & Ors. (07 Feb 2025) is the leading judgment on this section among those set out below: Directly construes Constitution of NFRA under s.132 and the procedural-fairness limit on disciplinary initiation under s.132(4)/Rule 11. Another 9 judgments on this section are set out below.
How do I find court cases under Section 132 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 132, section 132 Companies Act, section 132 of the Companies Act. People searching for it also type companies act 2013 section 132. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 10 reported judgments on this section are set out on this page, beginning with Adarsh Ranka v. Union of India & Ors. (07 Feb 2025).
What should I read with Section 132 of the Companies Act, and has it changed?
Its own text turns on Chartered Accountants Act 22 (Professional or other misconduct defined), section 247 (Valuation by registered valuers), so none of them can safely be read on its own. 3 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 18: most recently G.S.R NO. 624(E) Companies Accounts Fourth Amendment Rules 2022 dated 05.08.2022 (2022), then GS.R 456(E) Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2022 dated 17.06.2022 (2022), and 16 more.
When did Section 132 of the Companies Act come into force?
Section 132 of the Companies Act, cited as Companies Act 132, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.