Supreme Court Allows NFRA to Pursue Disciplinary Actions Against CAs

The Supreme Court of India has authorized the National Financial Reporting Authority (NFRA) to proceed with disciplinary actions against chartered accountants (CAs) and audit firms, even in cases lacking finalized Audit Quality Review Reports (AQRRs). However, the Court instructed that NFRA must not issue final orders for the time being, and any existing orders will be stayed until further directives are issued. This decision follows NFRA's appeal against a Delhi High Court ruling, which criticized NFRA's structural divisions for handling audit quality and disciplinary actions. NFRA argued that the High Court's concerns contradicted previous judgments by the National Company Law Appellate Tribunal and the Supreme Court itself. The ruling is particularly significant in light of ongoing investigations into a massive financial fraud involving Dewan Housing Finance Corporation Ltd., where substantial amounts of public funds are alleged to have been misappropriated. The Supreme Court's interim order aims to clarify the NFRA's powers and could set important precedents in India's financial oversight.