NFRA Cracks Down on Audit File Lapses: 60-Day Completion Rule, 7-Day Submission Deadline, Many More

The National Financial Reporting Authority (NFRA) has issued a circular dated December 16, 2025, addressed to all the Statutory Auditors of Public Interest Entities (PIEs) covered under Rule 3 of NFRA Rules, 2018, reminding them of their strict responsibilities towards maintenance, storage, archival, and timely submission of the audit file to NFRA.

During several legal processes, audit companies are asked by the NFRA to furnish audit files as proof of the work done by them in respect of specific audit engagements. NFRA observed several mistakes made by audit companies while furnishing their audit files. Many audit firms delay submitting audit files, seek repeated extensions, or convert files between physical and electronic formats in ways that damage the integrity of audit evidence. Such practices are against the Standards on Auditing (SA) and Standard on Quality Control (SQC 1).

Therefore, vide the present circular, NFRA has issued instructions for all the audit companies to properly complete their audit files and archive them within 60 days from the date of the audit report and generally retain them for at least 7 years. However, if any regulatory, court, or investigative proceedings are ongoing, audit files must be preserved even beyond 7 years.

The circular strongly warns against:

• Creating or modifying audit documents after the permitted time
• Converting electronic records into scanned, non-searchable PDFs
• Losing metadata, formulas, links, or audit trails due to improper format changes

Audit firms must submit complete audit files within the time limit of 7 days of NFRA’s request. As no extensions will be granted thereafter, they will only be available for exceptional cases, with detailed justification and advance submission of key audit documents like audit plans, risk assessments, misstatement summaries, and communications with the Audit Committee or Board.

In the circular, NFRA strongly highlighted that companies are not allowed to make any alteration, addition, or reconstruction to audit files. If caught performing any of the said activities, then legal action can be taken against the accused company.

Refer to the official NFRA circular for complete information.