NFRA has jurisdiction over the statutory audit of listed companies, and of specified classes of unlisted public companies and other bodies corporate that cross prescribed size thresholds — broadly, large unlisted public companies, insurance companies, banking companies, companies engaged in generation or supply of electricity, and companies whose securities are listed outside India — and once a company falls within NFRA's jurisdiction, the auditors of its material subsidiaries and associates are generally pulled into the same jurisdiction for matters connected to that audit, even if those subsidiaries wouldn't independently meet the threshold.
What determines NFRA jurisdiction vs ICAI's own disciplinary route
| Entity type | Jurisdiction |
|---|---|
| Listed companies (Indian stock exchanges) | NFRA |
| Companies with securities listed outside India | NFRA |
| Unlisted public companies meeting prescribed size thresholds (paid-up capital, turnover, or outstanding loans/debentures/deposits above specified limits) | NFRA |
| Banking, insurance, and electricity generation/supply companies (specified classes) | NFRA |
| Companies referred to NFRA by the Central Government in public interest | NFRA |
| All other companies not meeting the above | ICAI's own disciplinary mechanism under the Chartered Accountants Act |
What this means for the auditor of an in-scope company
- 01Check the company's own classification firstListed status and the size thresholds for unlisted companies are checked against the company itself, not against whether the audit firm is a large or small practice.
- 02Check group structure where the company has subsidiaries or associatesIf the parent falls under NFRA, auditors of its material subsidiaries and associates are also within NFRA's jurisdiction for matters relating to that audit, even where the subsidiary itself is a small, otherwise out-of-scope entity.
- 03Understand that NFRA jurisdiction, once triggered, generally continuesRules address how long a company stays within NFRA's jurisdiction even after it no longer meets the threshold (e.g. a delisting or falling below the size test) — this needs checking against the current rules rather than assumed to lapse immediately.
Overlap between NFRA and ICAI disciplinary jurisdiction for the same matter is specifically addressed by the rules — NFRA's jurisdiction, where it applies, displaces ICAI's disciplinary mechanism for that matter rather than running in parallel with it, which auditors sometimes misunderstand and respond to both bodies on the assumption both apply equally.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Audit workflow & automationThe statutory audit workflow, from evidence collection to sign-offAn engagement end to end: acceptance through to sign-off, with where the time actually goes and the four points at which engagements reliably stall.
- CARO & Companies ActSecretarial compliance checklist for a statutory auditorBoard meeting frequency, statutory registers and ROC filing timeliness, read as evidence of compliance culture rather than a secretarial checklist in its own right.
- Audit workflow & automationSA 700: forming an opinion, and what "true and fair" actually requires concluding onFinishing every planned procedure isn't the same as forming an opinion. SA 700 is the step that happens after the checklist, not instead of it.
- Audit workflow & automationSA 600: group audits, and the group auditor's responsibility for component auditors' workUsing another firm's work on a subsidiary doesn't transfer responsibility for the group opinion. SA 600 is explicit about what stays with the group auditor regardless.
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