The Financial Reporting Review Board (FRRB) was constituted in July 2002 by the Institute of Chartered Accountants of India to review the financial statements and auditor's reports of selected enterprises. The FRRB's primary activity is to review general purpose financial statements of enterprises selected either randomly or referred by regulatory bodies, to determine compliance with accounting standards and disclosure requirements. The FRRB also creates awareness of reporting obligations among users of financial statements through publications, seminars and workshops. The review process involves initial technical review followed by a group review. The FRRB maintains confidentiality and may refer non-compliances to regulators or disciplinary authorities. So far, the FRRB has reviewed 547 enterprises and referred issues to disciplinary authorities or

1. Financial Reporting Review
Board of ICAI
- An Overview
By CA K. Raghu
Central Council Member,
The Institute of Chartered Accountants of India

2. Formation of the Financial
Reporting Review Board
The Council of the Institute of Chartered
Accountants of India constituted the
Financial Reporting Review Board (FRRB)
in July 2002.

3. Scope of FRRB
Primary Activity
 Review of General Purpose Financial Statements
of enterprises selected suo motto or as special
case.
Other Activities
 Creating awareness and understanding of
compliance with ASs, AASs, Statement on
CARO, 2003 and reporting obligations relevant
to various enterprises among the users of
Financial Statements.
 Conducting National Workshops / Seminars.

4. Review of General
Purpose Financial
Statements

5. Review of General Purpose Financial
Statements and auditor’s Report thereon
by FRRB
The FRRB reviews the general purpose
financial statements of certain enterprises and
auditor’s report thereon with a view to
determine, to the extent possible:
 Compliance with the generally accepted accounting
principles in the preparation and presentation of
financial statements;
 Compliance with the disclosure requirements
prescribed by regulatory bodies, statutes and rules and
regulations relevant to the enterprise; and
 Compliance with the reporting obligations of the
auditor.

6. Selection of Enterprises for Review
The FRRB may review the general purpose
financial statements and the auditor’s report
of the following enterprises:
Enterprises selected either suo motto or
Enterprises referred to it by any regulatory body
like, Reserve Bank of India, Securities and
Exchange Board of India, Insurance Regulatory
and Development Authority, Ministry of
Company Affairs, etc or
Enterprises wherein serious accounting
irregularities have been highlighted by the media
reports.

7. Suo motto Selection Procedure
 Criteria based on factors like
• Industrial Classification
• Networth
• Turnover
 Random Sampling Method
 Avoiding Enterprises that have been
reviewed during last five years

8. Procedure for Review
Obtaining the financial statements selected
for review: It is generally obtained either by
writing directly to the enterprise concerned or from
other reliable sources like Stock Exchanges /
Registrar of Companies.
Conducting Review:
 Stage I: by a single Chartered Accountant,
Technical Reviewer
 Stage II: by a group of Chartered Accountants,
at a city level, Financial Reporting
Review Group

9. Procedure for Review
Action, if any, Non-Compliance observed: In case,
the FRRB finds any non-compliance, it is
classified in the following categories:
 Non-compliance, not so material
 Material Non-compliance
In cases where non-compliances, not so
material, are observed by the Board which do
not affect the true and fair view of financial
statements, the FRRB would appropriately
bring the non-compliance to the attention of
the auditor.

10. Procedure for Review
In cases where material non-compliance are observed
by the Board which affects the true and fair view of
financial statements, it may
Action against the Auditor(s): refer the case to the
Director (Discipline) of the Institute of Chartered
Accountants of India for initiating action against the
auditor under the Chartered Accountants Act, 1949.
Action against the Enterprise: Insofar as the
management of the enterprise is concerned, pending
the grant of relevant powers to the FRRB by the
Government of India, the FRRB would inform
irregularity to the regulatory body relevant to the
enterprise.

11. Review of Public Sector
Undertakings.
The Review Group’s Report on a Public
Sector Undertaking (PSU) is furnished to the
Office of Comptroller and Auditor General
of India (C&AG) and the C&AG’s
comments along with the Report of the
Review Group (on the particular PSU) is
considered by the Board

12. Confidentiality
The Board shall be bound to keep all the
matters referred to it as well as any other
information, papers, documents, etc, received
during the course of the review confidential.
Similar confidentiality conditions shall also
apply to the members of the Review Groups
and the Technical Reviewers associated with
the Board.

13. Other Activities

14. Creating awareness and understanding of
Reporting requirements among users of
Financial Statements
o Publication in the Journal : To publish
educative article on the major non
compliances observed in the review process
and also host a list of non compliances on the
website of the Institute without disclosing
identity.
o Publication: The Board has released a
Publication ‘A Study on compliances of
Financial Reporting Requirements’ during
the Council Year 2009-10.

15. Conducting Seminars/Training
Programmes/Workshops
The Board conducts various Seminars/
Training programmes/ Workshops at various
regional branches to impart training to the
members of the Institute for review of the
general purpose financial statements of the
enterprises and finally to empanel them with
the Board.

16. Clarification on Technical Issues
 There could be accounting and auditing
issues that may require a clarification -
FRRB does not have any power to issue
such clarifications.
 If the FRRB is of the opinion that the issue
may require a clarification, it may refer the
issue to the appropriate committee of the
Council for consideration.

17. Statistics - Review of General
Purpose Financial Statements
So far, the FRRB has selected 547 enterprises
for review, out of which 100 cases have been
referred to the Director (Discipline) of the
Institute and/ or to the relevant regulators and
for 201 cases appropriate note on non-
compliances have been issued to the auditors
of the enterprises which have been observed
by the Board during the review of the financial
statements of such enterprises.

18. THANK YOU