The Ministry of Corporate Affairs on 28th April 2020 has issued draft procedure which shall be followed by all entities regulated by NFRA for submission of Audit Files to NFRA.
Key Highlights from the Draft Procedure:
- These procedures are applicable to all audit firms/ chartered covered under the jurisdiction of the National Financial Reporting Authority.
- All entities must establish policies and procedures to ensure that Audit Files are organised, and maintained, in a manner completely consistent with the law, and are retained and accessible as long as prescribed. Similarly, Audit File management requirements should be incorporated into the entity’s IT policies, wherever applicable.
- The Audit File has to be submitted in an electronic format to NFRA and the original formats should not be changed except as provided in this document. Wherever hard copies/physical files/records are maintained; the entity shall take measures to ensure the integrity of such records. The hard copies shall be serially numbered, dated and signed and sealed, wherever applicable.
- In case an audit trail/log is not maintained in the existing application used by the entities or there is no log register, the fact shall be mentioned in the submitted Audit File. This will be viewed as an inherent weakness of the quality control policies of the entity.
- All the records i.e., the reports/records exported from the IT application, electronic files directly obtained and kept at various electronic/digital storage locations, scanned PDFs of hard copies, copies of the log register, audit trail, etc. shall be arranged in sequential order after the index page
- Further, the procedures will be applicable until such time as they are not expressly revoked/amended/modified by NFRA.
Click here to read the Notification.
