The authority oversees the auditing profession and the Indian Accounting Standards under the Companies Act 2013.

[3] Companies Act 2013, then gave the regulatory framework for its composition and constitution.

It is hoped that the establishment of NFRA as an independent regulator for the auditing profession will improve the transparency and reliability of financial statements and information presented by listed companies and large unlisted companies in India.

[4] According to Section 132 of the Companies Act 2013, "NFRA is responsible for recommending accounting and auditing policies and standards in the country, undertaking investigations, and imposing sanctions against defaulting auditors and audit firms in the form of monetary penalties and debarment from practice for up to 10 years.

Companies under Rule 3 (2) and 3 (3) are required to disclose information of their auditors to the NFRA through form NFRA-1.