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Sebi proposes additional disclosures for auditor resignations

The proposals revolve around strengthening disclosures to investors and strengthening and clarifying role of the audit committee.

ETMarkets.com|
Updated: Jul 18, 2019, 05.48 PM IST
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BCCL
Sebi-BCCL-1200
Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday issued a consultative paper on policy proposals with respect to resignation of statutory auditors from listed entities.

The policy proposals aim to strengthen disclosures to investors and clarify the role of the audit committee.

Under the proposed norms, if the auditor of a listed entity/material unlisted subsidiary of the listed entity proposes to resign, if the individual has signed the audit report for all the quarters (limited review/ audit) of a financial year, except the last quarter, then the auditor shall finalise the audit report for the said financial year before such resignation.

In all other cases, the auditor shall issue limited review/audit report for that quarter before such resignation i.e. previous quarter in reference to the date of resignation.

If the reason for the auditor’s resignation is the entity not providing information, the auditor shall provide an appropriate disclaimer in the audit report to that extent.

The market regulator also provided a format for such resignation.

Sebi noted that while the broad role of the audit committee of the listed entity is already specified under Sebi LODR Regulations, there is no specific procedure laid down that is to be followed by the auditor or the Audit Committee, when there are significant concerns leading to the auditor resignation.

In order to strengthen the role of the audit committee in the matter, it is proposed to issue a circular/amend Sebi LODR Regulations, specifying the procedure that may be followed in such cases, the regulator said.

Sebi has invited comments on the paper by August 8.

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