NFRA Issues Circular to Improve Communication Between Auditors and TCWG

The National Financial Reporting Authority (NFRA) has issued a circular dated 7th January 2026, to improve communication between the statutory auditors and those charged with governance (TCWG), including Boards of Directors and Audit Committees. The circular applies to all listed companies, some large companies covered under NFRA rules, and their auditors.

The NFRA, during an investigation, noticed some professional misconduct and non-compliances by auditors, which have weakened the corporate governance and audit failures. To solve this, NFRA has reminded the companies and their auditors about the requirements under the Companies Act, 2013 and the standards on Auditing (SAs).

Common Failures Found by NFRA

Here are some common auditor non-compliances as observed by NFRA.

• Incorrect Identification of Audit Committee and Management Executives and Executive Directors as TCWG.
• Auditors did not establish and document the form, timing and two‑way nature of communication with TCWG.
• Incomplete and insufficient documentation of the communication process with TCWG.
• Auditors wrongly treated discussions with the management as communication with TCWG.
• Auditors did not share the weaknesses or the absence of internal controls with TCWG.

Appropriate Ways of Communication by Auditors with TCWG/ACs.

Here is how the auditors are required to communicate:

• The communication must be in writing, and if the communication is oral, then it should be documented in writing and it must have the date, time and details of the persons engaged in the communication.
• Written communication must be clear and should be unambiguous while specifying the issues for the consideration of both parties. Bullet points or emails with “no response means acceptance” are not acceptable.
• Both the auditors’ and TCWG’s views must be included in the communication.
• The duration of discussions should be recorded.

Apart from these, NFRA also highlighted the need for timely communication. As per the Circular, auditors and those in charge of governance should meet at least twice a year: once before the audit starts and again before approving the financial statements by TCWG.

The NFRA also directed the auditors to request a meeting with TCWG in writing if they think that there is a potential for fraud or if they have observed weaknesses in the internal controls that can harm the company. The TCWG must either accept the meeting request or decline it, along with the reasons for declining it.

For Detailed Information, Refer to the Official Circular Attached Below.