The All India Chartered Accountants’ Society (AICAS) has opposed SEBI’s proposed norms on auditor exits/resignations, stating that they were in conflict with the guidance issued by the CA Institute and cannot be enforced.

The capital market regulator should not take any action that creates regulatory overlap, AICAS Secretary Chhaya Arya said in a letter to SEBI Chairman Ajay Tyagi.

AICAS, a non-governmental organisation, said that the conclusion drawn by SEBI in respect of auditor resignation cannot be generalised.

Completing the fiscal

Also, SEBI’s proposal to make it mandatory for auditors to finalise the audit report for the financial year before resigning, in case he has signed the limited review/audited for all the quarters, except the last quarter, is impossible to implement and cannot be adhered to by auditors, the letter said.

“SEBI is not able to appreciate that such kind of mandatory directions will only create chaos and confusion,” it added.

The CA Institute’s implementation guide on resignation/withdrawal from an engagement to perform audit of financial statements is already mandatory on chartered accountants., according to AICAS.


It may be recalled that SEBI had last month — in a consultation paper — proposed the changes so as to make auditors more accountable if they were to resort to resignations. They would have to provide a reason for the resignation and would have to state if the company was not sharing proper financial numbers for audit purposes, SEBI had said.

Also, SEBI had proposed that financial auditors of a company should not be able to casually resign without finalising the audit report for the full year if they have signed previous quarterly reports.

While SEBI’s proposed norms are expected to help enhance disclosures required in case of auditor resignations, AICAS is not on the same page as the market regulator in this matter.

AICAS is of the view that in a large number of cases where there is insufficient accounting disclosures, audit evidence or information is not adequate for finalisation of financial statements in spite of the full effort by all stakeholders and auditors, the SEBI proposed mandate to finalise the audit report will only complicate matters.

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