National Financial Reporting Authority (NFRA)
National Financial Reporting Authority (NFRA) Chairperson has pitched for ‘standalone legislation’ for the regulator in the interests of autonomy.
- He also demanded that all necessary penal provisions relating to financial reporting should be consolidated and vested with it.
Why this is necessary?
Currently, the NFRA may take action against auditors for professional misconduct but when it came to other functionaries of a company who have the responsibility for financial reporting; penal powers continue to be vested with the Centre. Standalone legislation will allow for integrated regulation of all participants in the financial reporting system.
National Financial Reporting Authority (NFRA) was constituted on 1st October, 2018 under section 132 (1) of the Companies Act, 2013.
Why was it needed?
In the wake of accounting scams, a need was felt to establish an independent regulator for enforcement of auditing standards and ensuring the quality of audits so as to enhance investor and public confidence in financial disclosures of companies.
The Companies Act requires the NFRA to have a chairperson who will be appointed by the Central Government and a maximum of 15 members.
Functions and Duties:
- Recommend accounting and auditing policies and standards to be adopted by companies for approval by the Central Government;
- Monitor and enforce compliance with accounting standards and auditing standards;
- Oversee the quality of service of the professions associated with ensuring compliance with such standards and suggest measures for improvement in the quality of service;
- Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties.
- It can probe listed companies and those unlisted public companies having paid-up capital of no less than Rs 500 crore or annual turnover of no less than Rs 1,000 crore.
- It can investigate professional misconduct committed by members of the Institute of Chartered Accountants of India (ICAI) for prescribed class of body corporate or persons.
World Bank discontinues doing Business rankings:
The World Bank Group has decided to discontinue publication of its ‘Doing Business’ rankings of country business climates after a review of data irregularities in the 2018 and 2020 reports.
What’s the issue?
- In August 2020, World Bank paused the publication of Doing Business reports following a number of irregularities were reported regarding changes to the data.
- The irregularities in Doing Business reports had affected four countries: China; Saudi Arabia; United Arab Emirates; and Azerbaijan.
- A probe of data irregularities cited “undue pressure” by top bank officials, including then-Chief Executive Kristalina Georgieva, to boost China’s ranking in 2017.
- This raised ethical matters involving former bank staff and board officials.
Why the report matters?
- World Bank’s annual report matters to several nations, especially developing ones, since it greatly influenced investor decisions by releasing a ranking of economies based on how easy it is to open up, and operate, a business. But while the report was hugely popular among investors, it was heavily criticized by many governments for its methodology that, leaders said, inaccurately captured the realities on the ground.
About Doing Business project:
- It provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.
- Launched in 2003, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle.
- It ranks countries on the basis of Distance to Frontier (DTF) score that highlights the gap of an economy with respect to the global best practice.
Collective Security Treaty Organization:
The Collective Security Treaty Organisation (CSTO) is planning to hold large military drills in Tajikistan next month, amid what it described as a deteriorating situation in neighbouring Afghanistan.
Implications and rationale behind this:
Tajikistan is the only country out of the six-member bloc led by Russia that shares a border with Afghanistan.
- Moscow has moved to cement its position as a key player in the region after the United States’ hasty retreat from Afghanistan and the Taliban’s takeover of the country.
- The group also said it has taken “collective measures” to ensure Tajikistan’s security in case of an “aggravation” on its border with Afghanistan.
About Collective Security Treaty Organization:
- It is an intergovernmental military alliance (six countries) that came into effect in 2002.
- Its’ origin can be traced to the Collective Security Treaty, 1992 (Tashkent Treaty).
- The headquarter is located in the Russian capital of Moscow.
- The objectives of the CSTO is to strengthen peace, international and regional security including cybersecurity and stability, the protection on a collective basis of the independence, territorial integrity and sovereignty of the member states.
Current CSTO members are Armenia, Belarus, Kazakhstan, Kyrgyzstan, the Russian Federation and Tajikistan.
Afghanistan and Serbia hold observer status in the CSTO.
What the membership entails?
- CSTO membership means that member states are barred from joining other military alliances, limiting, for example, their relationship with NATO.
- Most importantly, membership presumes certain key security assurances – the most significant of which is deterring military aggression by third countries.
- In the CSTO, aggression against one signatory is perceived as aggression against all.
- It however remains unclear whether this feature works in practice.
The UK, US and Australia have announced a historic security pact in the Asia-Pacific, in what’s seen as an effort to counter China. It is called the AUKUS pact and AUKUS alliance.
About the AUKUS Pact:
- Under the AUKUS alliance, the three nations have agreed to enhance the development of joint capabilities and technology sharing, foster deeper integration of security and defence-related science, technology, industrial bases and supply chains.
- Under the first major initiative of AUKUS, Australia would build a fleet of nuclear-powered submarines with the help of the US and the UK, a capability aimed at promoting stability in the Indo-Pacific region.
China has condemned the agreement as “extremely irresponsible”.
Concerns raised by China:
- The Alliance undermines regional peace and stability and intensifies the arms race.
- It shall reinvent a “Cold War mentality and ideological prejudice”.
Rationale behind the formation of this alliance:
The new partnership was announced in a joint virtual press conference. And while China was not mentioned directly, the three leaders referred repeatedly to regional security concerns which they said had “grown significantly”.
- In recent years, Beijing has been accused of raising tensions in disputed territories such as the South China Sea.
- Western nations have been wary of China’s infrastructure investment on Pacific islands, and have also criticized China’s trade sanctions against countries like Australia.
Why nuclear-powered submarines?
These submarines are much faster and harder to detect than conventionally powered fleets. They can stay submerged for months; shoot missiles longer distances and also carry more.
- Having them stationed in Australia is critical to US influence in the region, analysts say.
- The US is sharing its submarine technology for the first time in 50 years. It had previously only shared technology with the UK.
- Australia will become just the seventh nation in the world to operate nuclear-powered submarines, after the US, UK, France, China, India and Russia.
- Australia has reaffirmed it has no intention of obtaining nuclear weapons.