What is the role of the National Financial Reporting Authority (NFRA) in standards setting?
ANFRA directly drafts ASs
BNFRA recommends standards to the MCA, which prescribes them
CNFRA only audits ICAI
DNFRA has no role
Answer & Solution
Correct answer: B. NFRA recommends standards to the MCA, which prescribes them
1. Step 1: Per Ch 1, "NFRA recommend these standards to the MCA. MCA has to spell out the accounting standards applicable for companies in India."
2. Step 2: NFRA is a recommender + reviewer; MCA is the prescriber.
3. Step 3: Hence (B) is correct.
_Source: ICAI BoS CA Inter Paper 1, Ch 1 "Introduction to Accounting Standards"_