Sebi proposes stricter norms for statutory auditors
Upon resignation of auditor, audit committee needs to raise concerns with management, Sebi said.
Sebi said if the auditor resigns within 45 days from the end of a quarter in a financial year, the auditor should issue the limited review or audit report for such a quarter before the resignation.
And if the auditor resigns after 45 days from the end of a quarter in a financial year, the auditor should issue the limited review or audit report for that quarter as well as for the next quarter before resigning.
"Notwithstanding the above, 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 in a circular posted on its website.
The regulator said in case of any concern with the management of the listed entity or material subsidiary such as non-availability of information or non-cooperation by the management which may hamper the audit process, the auditor should approach the chairman of the audit committee of the relevant listed company.
"..the audit committee shall receive such concern directly and immediately without specifically waiting for the quarterly Audit Committee meetings," Sebi said.
"In case the auditor proposes to resign, all concerns with respect to the proposed resignation, along with relevant documents, shall be brought to the notice of the audit committee. In cases where the proposed resignation is due to non-receipt of information / explanation from the company, the auditor shall inform the audit committee of the details of information / explanation sought and not provided by the management, as applicable," Sebi said.
The regulator had sought public comments on these proposals in a bid to strengthen disclosures to investors and clarify the role of the audit committee.