Audit season starts as soon as a financial year gets over. And it is no different for SEBI registered Investment Advisers (RIAs).
All RIAs (individual as well as non-individuals) have to get a yearly audit done in respect of compliance with the SEBI IA regulations from a Company Secretary or a Chartered Accountant in practice.
If you have questions, here are some FAQs to help you come upto speed on audit for RIAs.
#1 – What is the due date of the audit?
The audit has to be completed within 6 months from the end of the financial year. This will be September 30, 2022 for the financial year ending March 31, 2022.
#2 – Do we need to submit anything to SEBI?
The submissions have to be done to BASL and not to SEBI.
The documents (as mentioned below) are required to be submitted via email to compliance.ria@bseasl.com
The subject line should be “Annual compliance audit reporting for FY ended ____ – BASL IA Member Name __________ BASL Member ID : ___________ .”
You also need to disclose the status of the audits conducted, on your website.
The text has to be as follows:
“Disclosure with respect to compliance with Annual compliance audit requirement under Regulation 19(3) of SECURITIES AND EXCHANGE BOARD OF INDIA (INVESTMENT ADVISERS) REGULATIONS, 2013 for last and current financial year are as under :
Investment Advisers not having websites/mobile applications need to send status of the annual compliance report to the investors on their registered email on periodic basis.
#3 – What needs to be submitted to BASL?
The report, along with the adverse findings, if any, has to be submitted within one month from the date of the audit report but not later than October 31st of each year for the previous financial year.
Along with the adverse findings, the action taken report approved by the individual IA / management of the non-individual IA needs to be submitted as well.
If you are also providing distribution services, you have to get a certificate from an auditor (in case of an individual IA) or statutory auditor (in case of a non-individual IA) confirming compliance of the client level segregation requirements.
So, along with the audit report you need to submit:
- Adverse findings, if any
- Action taken report by the IA / management if there are adverse findings
- Certificate from auditor for client level segregation compliance, if applicable
#4 – What do we need to give to the auditor?
I have a detailed post on reference points for the compliance audit. Click here to read.
#5 – What if the previous year’s audit is pending?
It is recommended to get the audit done for the previous year rather than being non-compliant. For the financial year 2020-21, the report also has to be submitted to BASL by June 30, 2022.
Do I provide compliance audit services?
Yes, as a Company Secretary in practice I am eligible to conduct the audit and issue the compliance report. Click here to know the process I follow.
You may think “the audit should be completed within 6 months from the end of the financial year, so why hurry?”
Look at it this way – If there are any gaps in the process, they can be filled as soon as possible and save precious time. So, the earlier the better.
With the increase in the compliance requirements, I would recommend you to start the audit asap. If there is a delay in completion of the audit, the next year’s audit will also be affected and you may get adverse remarks in the audit report.
If you have any further queries, please send an email to kruti@cskruti.com.