Dec 31, 2020

SEBI FAQs on Disclosure of Forensic Audits

The Securities and Exchange Board of India (‘SEBI’) had, on October 8, 2020, amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) to mandate disclosures by listed entities relating to the initiation of forensic audits. Our Client Alert on this amendment can be accessed here. On November 27, 2020, SEBI has issued frequently asked questions (‘FAQs’) in relation to this requirement, and made the following key clarifications:

i.     Forensic audits refer to audits initiated with the objective of detecting any misstatements in financials, misappropriation/ siphoning or diversion of funds, but do not cover matters such as product quality control, manufacturing, recruitment practices, supply chain process and matters that would not require revision to financial statements of the listed entity; and

ii.   In the disclosure of the final forensic audit report, any personally identifiable information (including names of individuals and commercially sensitive information) may be expunged.




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