CA society: SEBI proposal on auditor resignation in conflict with institute norms

KR Srivats New Delhi | Updated on August 12, 2019 Published on August 12, 2019

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.

Published on August 12, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.