Compliance audit requirement by SEBI Registered Investment Adviser

Last Updated On: May 1, 2020, 4:59 a.m.
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FAQs on the Compliance audit requirement by SEBI Registered Investment Adviser

 

Q 1. What is the Compliance Audit of Sebi Registered Investment Adviser?

Ans: Basically Compliance Audit is checking of the compliances followed by the Investment Advisers as stated under SEBI (Investment Advisers) Regulations, 2013.

 

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

Ans: 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:

  • KYC,
  • Risk Profiling,
  • Suitability Assessment of clients,
  • Client agreements,
  • records to be maintained by Investment Adviser,
  • policies, procedures related to the daily conduct of the Investment Adviser, etc.

 

Q 3. Is it required to be conducted for an Investment Adviser who is registered in individual capacity?

Ans: Yes, as per Regulation 19(3) of SEBI Investment Advisers Regulations, 2013, an Investment Adviser is required to get the Compliance Audit done, irrespective of fact that whether he is individual or a Corporate Body.

 

Q 4. Filings done on SEBI Intermediary Portal by the Investment Advisers will suffice with the requirement of Compliance Audit?

Ans: 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.

 

Q 5. Does SEBI asks for Compliance Audit Report?

Ans: Yes, SEBI has power to inspect the documents and call upon any information from Investment Adviser. While carrying out inspection SEBI asks for Compliance Audit Report. Further SEBI has mentioned the non-compliance of Compliance Audit in an Order passed against Tradebizz Research dated 22nd August, 2019.

 

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

Ans: As of now there is no requirement of mandatorily submitting the report to SEBI. But SEBI in its Consultation paper issued on January 15, 2020, has specified that post completion of the Compliance audit, Investment Adviser must report the adverse findings along with the action taken thereof to SEBI within a period of one month from the date of the audit report i.e. not later than  July  31st of each year for the previous financial year.

 

Q 7. What is the last date for Compliance Audit?

Ans: SEBI has specified in a Consultation Papers issued on October 7, 2016, and January 15, 2020, that Compliance Audit shall be completed within 3 months from the end of Financial Year i.e. till 30th June.

 

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