STOCK MARKET BSE NSE

SEBI tightens norms for resignation of auditors

In a circular, the regulator said that listed entities should disclose the detailed reasons to stock exchanges in case of resignation of its auditor within 24 hours of receiving the reasons from the a

Published: 19th October 2019 03:10 PM  |   Last Updated: 19th October 2019 03:10 PM   |  A+A-

SEBI

For representational purposes (File | Reuters)

By IANS

MUMBAI: In the wake of a number of resignations in listed companies off late, the Securities and Exchange Board of India (Sebi) on Friday floated stricter disclosure norms for the resignation of auditors.

In a circular, the regulator said that listed entities should disclose the detailed reasons to stock exchanges in case of resignation of its auditor within 24 hours of receiving the reasons from the auditor.

"Sub-clause (7A) inserted under Clause A in Part A of Schedule III under Regulation 30(2)of SEBI LODR Regulations requires detailed reasons to be disclosed by the listed entities to the stock exchanges in case of resignation of the auditor of a listed entity as soon as possible but not later than twenty-four hours of receipt of such reasons from the auditor," it said.

Further, the directive said the audit committee of a listed entity has to make recommendations for the appointment, remuneration and terms of appointment of the auditors.

"Under Sub-clause (7), the Audit Committee is also responsible for reviewing and monitoring the independence and performance of auditors and the effectiveness of the audit process," it said.

It also said, Regulation 36(5) of the Sebi's norms lays down certain disclosures to be made part of the notice to the shareholders for an annual general meeting, where the statutory auditors are proposed to be appointed or re-appointed, including their terms of appointment.

"Resignation of an auditor of a listed entity/its material subsidiary before completion of the audit of the financial results for the year due to reasons such as pre-occupation may seriously hamper investor confidence and deny them access to reliable information for making timely investment decisions."

In the past two years, listed companies have seen a slew of auditor resignations, and in some cases, they have come just a few weeks ahead of the announcement of financial results. The auditor resignations have in these cases cited reasons ranging from lack of information to mutual exits.

The Sebi said that if the auditor resigns within 45 days from the end of a quarter of a financial year, then the auditor shall, before such resignation, issue the limited review or audit report for such quarter.

Further, if the auditor resigns after 45 days from the end of a quarter of a financial year, then the auditor shall, before such resignation, issue the limited review or audit report for such quarter as well as the next quarter.

"If the auditor has signed the limited review/audit report for the first three quarters of a financial year, then the auditor shall, before such resignation, issue the limited review/audit report for the last quarter of such financial year as well as the audit report for such financial year," Sebi said.
 



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp