Page 74 - Quick Insights Book 2022

Chap. 19 – Securities and Exchange Board of India (SEBI)

investment bank, an accountant and a law firm. The IPO  Legal rights and obligations as investors towards
process officially begins with what is typically called a “kick-off” regulators and brokers Redressal of Grievances
meeting. All the members of the IPO team plan a time table
for going public and assign certain duties to each member.  Resolution in case of disputes as Arbitrator
The independent accountant’s role in the IPO process includes
auditing the financial statements, restating them in compliance AUDIT OF MEMBER OF STOCK EXCHANGE
of SEBI requirements, resolving accounting issues. Increasing As per the SEBI Circular No. SMD/SED/0072/92 dated
emphasis is being placed on the scope of “comfort letters” December 31, 1992 members of stock exchanges are required
which a company’s auditor provides to the underwriters and the to get their annual accounts audited by Chartered Accountants
company’s board as part of their due diligence. within 6 months from the closing of books of account and

Commentary on accounting policies and problems, improper submit a copy of the same to stock exchanges within 30 days
revenue recognition, changes merely for the purpose of inflating of the receipt of the audit report. This requirement of conduct of
profits are a few of the areas where the accountant’s insight is annual audit of stock brokers emanates from GOI directive No.
sought. In many instances, the financial statements must also F.1/5/SE/83 dated May 31, 1984 which enjoins stock brokers
be prepared in accordance with US GAAP or a reconciliation to get their books of account audited by qualified Chartered
between the Indian GAAP and US GAAP is required. In many Accountants. It is expected that compulsory audit of accounts
cases, auditors are required to review and offer comments of members of stock exchange would inculcate a sense of
on consolidated accounts. Accountants can also leverage financial discipline in the members of stock exchanges would
their experience during the planning phase to help ensure also lend creditability to their financial statements and would
that the company’s house is in order before the IPO process. also result in expansion of professional opportunities in this
Accountants play a key role in advising on/ certifying the area.
following: As per the SEBI Circular No. MRD/DMS/Cir-29/2008 dated

● Compliance with the corporate governance. Promoter’s October 21, 2008, it has been decided that stock brokers/
contribution in a project. trading members/clearing members shall carry out complete
internal audit on a half yearly basis by chartered accountants,
● Amount deployed/spent on project. company secretaries or cost and management accountants who
are in practice and who do not have any conflict of interest.
Consultancy on Investor’s Protection:
Valuation Report and Opinion on Scheme of
Chartered Accountants can provide the following services:
Arrangement by Listed Entities
 Corporate Investors – Due Diligence of Investee Securities and Exchange Board of India has issued guidelines
Companies Individual Investors – Advise Investment vide circular CFD/DIL3/CIR/2017/21dated 10.03.2017 related
options
to Scheme of Arrangement by Listed Entities. The guidelines
 Advising on selection of broker/sub-broker mandatorily require listed entities to submit valuation report from
an Independent Chartered Accountant. While considering the
 Consultancy on Investment in Primary Market – scheme of arrangement of any listed entity SEBI may also seek
especially Issue Price/price band in IPOs, quality of clarifications and opinion of a Chartered Accountant the merits
financial statements. and viability of draft scheme of arrangement.
 Consultancy on Investment in Secondary markets,
various financial instruments namely derivatives
 Risk factors in investment options

Quick Insights on Professional Opportunities for Chartered Accountants 61