SEBI finally issued strict disclosures regarding auditors' resignations

Mumbai, Ta: 18 October 2019, Friday

As the result of a number of auditors' resignation cases over the last two years in the listed companies and in some cases just a few weeks before the financial results of the companies were announced, the capital markets regulator Sebi has tightened disclaimers regarding the auditor's resignation.

The auditors were resigned as auditors of the company giving various reasons, including lack of information. Sebi has issued stringent disclosure criteria for auditors in the case of resignation in the case of investors not receiving timely and adequate information from the sudden resignation. Interestingly, these new standards have been introduced when auditors are questioning the extent of SEBI's authority.

According to the circular issued by SEBI today, if the auditor resigns within 5 days before the end of the quarter, he will be required to submit a limited review or audit report for the quarter. If the resignation is given within 7 days before the relevant quarter ends, the auditor will be required to provide a limited review for the quarter and for the next quarter.

This will allow investors to get some idea about the financial position of the company till the appointment of a new auditor. It is worth mentioning that in the past, favorite beavers, in the case of Vakrangi, had the auditors resign due to lack of cooperation, lack of information and notable objections by the tax department.