Revised SEBI Procedure/ Formats for Limited Review/ Audit Reports of Listed Entities
SEBI has notified the revised procedure/ formats for Limited Review/ Audit Reports of Listed Entities (including those entities whose accounts are to be consolidated with the listed entity), applicable w.e.f. 1 April, 2019, in line with changes suggested by Kotak Committee in the matter of Group Audit.
As per amended SEBI LODR Regulations, Statutory auditors of a listed entity shall undertake a limited review of the audit of all the entities/ companies whose accounts are to be consolidated with the listed entity as per AS 21, in accordance with guidelines issued by the SEBI on this matter.
Sub: Procedure and formats for limited review / audit report of the listed entity and those entities whose accounts are to be consolidated with the listed entity
1. The Kotak Committee Report on Corporate Governance, inter-alia, suggested certain changes in the regulatory framework for Group Audit. SEBI, while considering the recommendation of the Kotak Committee, decided to amend Regulation 33 of the SEBI (Listing Obligation and Disclosures Requirements) Regulations, 2015 (“SEBI LODR Regulations”), after considering public comments, with respect to this matter. Accordingly, the following new sub-regulation was inserted under Regulation 33 of the SEBI LODR Regulations, which will come into effect from April 01, 2019.
“(8) The Statutory auditor of a listed entity shall undertake a limited review of the audit of all the entities/companies whose accounts are to be consolidated with the listed entity as per AS 21 in accordance with guidelines issued by the Board on this matter”
i) all listed entities whose equity shares and convertible securities are listed on a recognised stock exchange,
ii) the statutory auditors of such entities,
iii) all entities whose accounts are to be consolidated with the listed entity and
iv) the statutory auditors of entities whose accounts are to be consolidated with the listed entity
(Referred to as ‘parties to the limited review’ for easy reference), shall, with respect to the aforesaid sub-regulation as applicable, comply with the following:
a. Procedure: The parties to the limited review shall, as applicable, follow the procedure as given at Annex 1 to this Circular.
i. SEBI, vide Circular No. CIR/CFD/CMD/15/2015 dated November 30, 2015, had prescribed formats for:
a. Periodical Financial Results by listed entities; and
b. Limited Review Reports and Audit Reports by statutory auditors of the listed entities
ii. SEBI further vide circular no. CIR/CFD/FAC/62/2016 dated July 05, 2016 had made certain changes to the formats for submitting to periodical financial results.
iii. While the formats for periodical financial results to be submitted by listed entities will continue to remain the same as specified in the aforesaid circulars, the formats for limited review reports and audit reports specified vide SEBI Circular No. CIR/CFD/CMD/15/2015 dated November 302015 will be replaced vide this circular.
iv. Accordingly, paras 3(d) and (e) of SEBI Circular No. CIR/CFD/CMD/15/2015 dated November 30, 2015 and the relevant Annexure V, VI, VII and VIII referred to therein stand deleted. In place of the formats specified in these four Annexures, the Limited Review reports and Audit Reports, as applicable, shall be given by statutory auditors in the formats specified in Annex 2 to this circular.
v. A summary of the formats, as per applicability, is placed below for easy reference: (please refer attachment for details)
vi. Insurance companies shall follow formats as prescribed by IRDA.
3. The provisions of this circular shall be in addition to and not affect the norms and procedures with respect to limited review specified under clause (c) of sub-regulation 3 of Regulation 33 and related provisions.
4. This Circular shall come into force with effect from April 01, 2019 i.e. the date on which sub-regulation 8 of Regulation 33 comes into force.
5. The Institute of Chartered Accountants of India (ICAI) may consider issuing necessary guidance to Chartered Accountants ensure compliance with this circular in letter and in spirit.
6. The Stock Exchanges are advised to bring the provisions of this circular to notice of the listed entities and disseminate it on their websites.
7. The circular is issued in exercise of the powers conferred under sections 11 and 11A of the Securities and Exchange Board of India Act, 1992 read with regulations 33(8) and 101 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. (contd… please refer above attachment for detailed information)