India Must Improve Corporate Governance, Accounting Standards: NFRA Chairman

With India is poised to becoming the world's third-largest economic powerhouse, the emphasis is on the importance of adopting global standards in accounting and reporting, said Ajay Bhushan Prasad Pandey, Chairperson, National Financial Reporting Authority (NFRA).

Speaking at an Assocham event in New Delhi, he highlighted the significant progress India has made in financial inclusion in the past 10 to 15 years, citing increased access to bank account’s digital identity, and financial transactions through UPI. Additionally, the rise in demat accounts and growing mutual fund participation underscore growing financial empowerment in India.

Pandey also pointed out that automation and technology have streamlined tax processes, with online tax filing becoming the norm across the country, resulting in the majority of Income Tax Returns now being filed electronically.

He further said that all have a collective responsibility and exercise today and should continue to create trust, improve the corporate governance and work in that direction. 

"Whether it is in the field of IT or management or accounting and auditing, we have a large amount of talent pool, right? We have kind of made our mark in the field of technology. The question here is: will we make our mark in corporate governance and also in the accounting and auditing professions across the world? I have no doubt when I say this because I have been part of those other reforms during the last seven to eight years. India will do this, and this is something in which I am very confident," he mentioned. 

Preeti Malhotra, Chairperson, Assocham National Council for Corporate Affairs, Company Law and Corporate Governance said that the exponential growth in AI and robotics is transforming the financial landscape, driving the evolution towards sustainability reporting and more advanced auditing practices. Technology enables real-time transaction recording, enhanced financial data analysis, and informed decision-making that empowers organizations to identify trends and opportunities. 

As the regulatory environment becomes increasingly complex, especially in tax regulations and accountancy compliance, optimizing financial reporting and tax structures is critical, Malhotra added. 

Abhishek Rara, Chartered Accountant focused on merger and acquisition activities that are driving small companies to scale up and start reporting accurately. As India emerges as a global business hub, risk management is no longer just the responsibility of audit firms but also of investors, CEOs, and other stakeholders. 

Rara stated, “Additionally, geopolitical risks, often underreported, can significantly impact cross-border management, making it essential for companies to be proactive in managing and disclosing these potential challenges. Climate Change is also the biggest factor that is bringing change to financial reporting.”

Jaideep S Trasi, Deputy Managing Partner, True and Fair Professionals Network shared how in this evolving landscape, audit committees are poised to add significant value by integrating ESG factors into reporting frameworks, promoting good governance, and aligning with global industry standards to create a sustainable mandate for the future.

Rahul Agrawal Partner, Audit and Assurance, M S K A and Associates highlighted that corporates in India must prioritise accurate reporting, especially changes that pose the biggest risks to businesses today. These risks need to be addressed and transparently reported. Ethical concerns and cyber security that remain key considerations in maintaining the integrity of financial data.