NFRA Circular on Maintenance, archival and submission of Audit File to NFRA
The National Financial Reporting Authority (NFRA) recently released a circular to address critical deficiencies in how audit firms maintain, archive, and submit audit documentation. The regulator noted that some firms were seeking unreasonable extensions, submitting incomplete files, or even creating documentation "post-facto" to cover up audit lapses. To curb these practices, the NFRA has mandated that all audit files for Public Interest Entities (PIEs) must be fully assembled and archived within 60 days of the auditor's report, as per Standard on Auditing (SA) 230 and SQC 1. Furthermore, once the NFRA requisitions a file, firms must submit it within a strict seven-day window. Extensions are now discouraged and will only be granted under exceptional circumstances, requiring a detailed justification that includes the specific page counts and electronic file sizes (in MBs) of the requested documents.
The circular also places a heavy emphasis on the digital integrity of audit evidence. Auditors are required to preserve electronic evidence in its original format to ensure that metadata, interactive formulas, and system-generated logs remain intact. The NFRA explicitly warned against the practice of converting searchable electronic records into scanned, non-searchable PDFs, which hinders regulatory review. While the standard retention period remains seven years, the circular clarifies that firms must retain files longer if a client is under legal or regulatory scrutiny. By tightening these rules, the NFRA aims to ensure that audit files serve as a reliable, contemporaneous record of the work performed, thereby enhancing the overall accountability and quality of the audit ecosystem in India.
