Frequently asked questions on Compliance Audit

We have been receiving multiple questions related to Compliance audit requirement by SEBI Registered Research Analysts. Based on that we have attempted to capture some of the common questions.

1. What is Compliance Audit?

Basically Compliance Audit is checking of the compliances followed by the Research Analysts as stated under SEBI (Research Analysts) Regulations, 2014.

2. Is it different from Annual Accounts Audit/Tax Audit done by CA?

Yes, it is way different from annual accounts audit or tax audit which is done by a Chartered Accountant. In accounts/tax audit the financials of the Organisation is checked whereas in Compliance Audit, compliances of the SEBI Act and Regulations are being checked such as correspondences with clients, disclosures in research report, policies and procedures established by you, trading activities of you and your employees, records to be maintained by Research Analyst, etc.

3. Is Compliance Audit applicable on individual Research Analyst?

Yes, as per Regulation 25(3) of SEBI Research Analysts Regulations, 2014, a Research Analysts is required to conduct Compliance Audit, irrespective of fact that whether he is individual or a Corporate Body.

4. Filings done on SEBI Intermediary Portal by the Research Analysts will suffice with the requirement of Compliance Audit?

No, filings done on SEBI Intermediary Portal will not suffice with the requirement of Compliance Audit, as it is merely a reporting done by the entity to the SEBI not the Audit, which is required to be done by an Independent Professional.

5. Does SEBI asks for Compliance Audit Report?

Yes, SEBI has power to inspect the documents and call upon any information from Research Analysts. While carrying out inspection SEBI may ask for Compliance Audit Report.

6. Is there any requirement of submitting Compliance Audit Report to SEBI?

As of now there is no requirement of mandatorily submitting the report to SEBI. But SEBI may ask it from you at any point of time.

7. What if there was no work done related to research analyst in the Financial Year?

In that case, you need to obtain a Certificate from Independent Professional stating that there was no work done related to Research Analyst.

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