Chartered Accountants’ Society Opposes SEBI Proposal; States That Auditor Exits Are In Conflict With AICAS Norms

The All India Chartered Accountants’ Society (AICAS) has opposed the Securities & Exchange Board of India’s (SEBI) proposed norms on auditor exits and resignations.

The AICAS has stated that these SEBI proposals are in conflict with the guidance issued by the CA Institute and hence cannot be enforced.

The AICAS Secretary Chhaya Arya has stated the organization’s stand in a letter to SEBI Chairman Ajay Tyagi arguing that the capital market regulator must not take any action which could create a regulatory overlap.

The letter mentioned that the conclusion drawn by SEBI about auditor resignations cannot be generalized.

The letter categorically stated that SEBI’s proposal to make it mandatory for auditors to finalize 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.

It stated that SEBI is unable to appreciate that such kind of mandatory directions would only create chaos and confusion.

The letter mentioned that the CA Institute’s implementation guide on resignations / withdrawals from an engagement to perform audit of financial statements is already mandatory for chartered accountants.

AICAS has taken the position that in a large number of cases where there is insufficient accounting disclosure, audit evidence or information is not adequate for finalization of financial statements despite all efforts by all stakeholders and auditors, the SEBI proposed mandate to finalize the audit report would only complicate matters.