The Securities and Exchange Board of India (SEBI), through a circular dated March 25, 2026, clarified and expanded the eligibility criteria for conducting annual compliance audits of Investment Advisers (IAs). The circular modifies the Master Circular to allow members of the Institute of Cost Accountants of India, in addition to members of the Institute of Chartered Accountants of India and Institute of Company Secretaries of India, to perform such audits under the SEBI (Investment Advisers) Regulations, 2013. Investment Advisers must complete annual audits within six months of the financial year-end and submit reports, including adverse findings, by October 31. The circular also mandates obtaining annual compliance certificates for client-level segregation. This move enhances professional inclusivity, ensures robust compliance monitoring, and strengthens investor protection by broadening the pool of qualified auditors.
Securities and Exchange Board of India
Circular No. HO/38/12/12(1)2026-MIRSD-SEC-FATF/I/7933/2026 March 25, 2026
To,
All registered Investment Advisers,
Investment Advisers Administration and Supervisory Body (IAASB)
Madam/ Sir,
Subject: Clarification regarding eligibility of members of the Institute of Cost Accountants of India to conduct annual audit of Investment Advisers
1. SEBI vide Master Circular for Investment Advisers dated February 06, 20261 (‘Master Circular’), has provided a consolidated document containing all directions/ instructions/ reporting requirements pertaining to Investment Advisers (IAs).
2. The paragraph 31.2 of Chapter VII of the Master Circular, inter-alia, provides that a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India can conduct annual audit of an IA to verify compliance with the provisions of the SEBI (Investment Advisers) Regulations, 2013 (‘IA Regulations’) and circulars issued thereunder.
3. Given the representation from the Institute of Cost Accountants of India and considering the recognition of Cost Accountants to conduct annual audit of IAs, under Regulation 19(3) of the IA Regulations, it has been decided to modify the aforementioned paragraph to clarify eligibility of members of the Institute of Cost Accountants of India to conduct annual audit of IAs.
4. Accordingly, the paragraph 31.2 of Chapter VII of the Master Circular, shall be replaced with the following:
“To conduct annual audit and submit a report and adverse findings, if any
In terms of regulation 19(3) of the IA Regulations, IA is required to conduct an annual audit in respect of compliance with the IA Regulations and circulars issued thereunder from a member of the Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India within six months from the end of each financial year. Submit a report of the same and adverse findings of the audit, if any, along with action taken thereof duly approved by the individual IA/ management of the non-individual IA within a period of one month from the date of the audit report but not later than October 31st of each year for the previous financial year.”
5. Additionally, paragraph 1 (i) (i) of Chapter I of the Master Circular, shall be replaced with the following:
“The IAs shall maintain on record an annual certificate from a member of ICAI/ ICSI/ ICMAI or from an auditor confirming compliance with the client level segregation requirements as specified in Regulation 22 of the IA Regulations. Such annual certificate shall be obtained within 6 months of the end of the financial year and form part of compliance audit, in terms of Regulation 19(3) of the IA Regulations.”
6. The provisions of this circular shall be applicable from the date of issue of this circular.
7. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulations 19(3) and 22(5) of the SEBI (Investment Advisers) Regulations, 2013, to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
8. This circular is issued with the approval of the competent authority.
9. This circular is available on the SEBI website at sebi.gov.in under the category, ‘Legal → Circulars’.
Yours faithfully,
Divya Hamirbasia
Deputy General Manager
022-26449293
divyah@sebi.gov.in
Note:
1 Cir. no. HO/38/12/11(2)2026-MIRSD-POD/I/4300/2026 dated February 6, 2026;
