Sebi moots stricter disclosures on auditor resignation

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Published: July 18, 2019 7:18:19 PM

Markets regulator Sebi Thursday proposed stricter disclosures, including detailed reasons, on resignation of auditors, amid rising instances of auditors quitting companies.

The regulator also proposed to further strengthen and clarify the role of audit committees of the listed firms.

Markets regulator Sebi Thursday proposed stricter disclosures, including detailed reasons, on resignation of auditors, amid rising instances of auditors quitting companies. Besides, an auditor would have to provide appropriate disclaimer in case his or her resignation is due to non-receipt of information from the company concerned. The regulator also proposed to further strengthen and clarify the role of audit committees of the listed firms.

Sebi came out with proposals as it found that resignation of an auditor before completion of the audit of financial results for a year hampers the investor confidence and leaves investors with lack of reliable information for taking their financial decisions.

In order to enhance responsible behaviour of auditors and strengthen the disclosures to investors and stakeholders it is proposed that if the auditor has signed the audit report for all quarters of a financial year, except the last quarter, then the auditor shall finalize the audit report for the said financial year before such resignation, Sebi said.

In all other cases, the auditor shall issue limited review/audit report for that quarter before such resignation which means if the auditor of a listed entity makes a decision to resign in August 2019, the auditor shall issue the limited review/audit report for the quarter ended September 30, 2019 before such resignation. The regulator asked public comments on the proposals latest by August 9.

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