Clarification regarding eligibility of members of the Institute of Cost Accountants of India to conduct annual audit of Investment Advisers and Research Analysts

These circulars issued by the SEBI clarifies the eligibility of members of the Institute of Cost Accountants of India to conduct annual audits of Investment Advisers (IAs) and Research Analysts (RA). Earlier, as per the Master Circular dated February 6, 2026, only members of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India were allowed to perform such audits. Following representations and regulatory provisions, SEBI has now officially included Cost Accountants as eligible professionals.

Following representations from the Institute of Cost Accountants of India, SEBI reviewed the provisions and decided to expand the eligibility criteria. The circulars officially amend the earlier rule to include members of ICMAI as eligible professionals to conduct annual compliance audits of Research Analysts under Regulation 25(3) of the SEBI (Research Analysts) Regulations, 2014 and of Investment Advisers under Regulation 19(3) of the SEBI (Investment Advisers) Regulations, 2013.

The revised provision requires RAs and IAs or research entities to complete an annual audit of their compliance with applicable regulations within six months from the end of each financial year. The audit must be conducted by a member of ICAI, ICSI, or ICMAI. After completion, the audit report must be submitted to SEBI or the Research Analyst Administration and Supervisory Body (RAASB) within one month, and no later than October 31 for the preceding financial year. Additionally, Research Analysts are required to disclose the status of the compliance audit on their websites. If there are any adverse findings, they must also publish those along with the corrective actions taken. The audit report must also be shared with clients to ensure transparency.

However, the reporting requirement is slightly different for IAs. They must submit the audit report along with any adverse findings and the action taken, duly approved by the individual adviser or management (in case of non-individual entities), within one month of the audit report and not later than October 31. Unlike the RA circular, the IA provision explicitly emphasizes management approval of the audit findings and action taken, making internal accountability more prominent.

These circulars take immediate effect from the date of issuance and has been introduced to strengthen regulatory compliance, enhance transparency, and protect investor interests in the securities market.