Review of manner of dealing with Audit Reports containing Qualifications 

SEBI has put in place a mechanism to review the audit qualifications contained in the audit reports. The said mechanism has been incorporated in the SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’).With the objective that the impact of the audit qualification is disseminated without any delay and to further streamline the process the Board approved the following revised procedure to deal with such matters:

i.  The listed entities shall be required to disclose the cumulative impact of all the audit qualifications on relevant financial items in a separate form called “Statement on Impact of Audit Qualifications” instead of present Form B. Such disclosure would be in a tabular form along with the Annual Audited Financial results filed in terms of Listing Regulations.

ii.  In cases where there are no audit qualifications, the existing requirement of filing Form A signed by top officials / directors of the company and auditors shall not be necessary.

iii.  The management shall have the right to give its views on the audit qualifications in the new form.

iv.  The existing requirement of adjustment in the books of accounts of the subsequent year shall not be necessary.

The new mechanism is applicable from the financial year ended March 2016, as well as for the earlier cases.

Source  SEBI Board Meeting Dated 12.3.2016