Cost Accountants Can Now Conduct Annual Audits Of Investment Advisers: SEBI [Read Circular]

The Securities and Exchange Board of India (SEBI) has expanded the pool of professionals authorized to conduct annual audits of investment advisers (IAs).

Through a circular issued on March 25, 2026, SEBI amended its Master Circular for Investment Advisers to include cost accountants as eligible auditors, alongside chartered accountants and company secretaries.

Until now, the responsibility for auditing IAs rested exclusively with members of the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).

This framework often limited the availability of qualified auditors, particularly for smaller advisory firms operating outside major financial hubs. Responding to representations from the Institute of Cost Accountants of India (ICMAI), SEBI has now recognized cost accountants as competent professionals to carry out these compliance checks.

The annual audit is an important aspect of regulatory oversight under the SEBI (Investment Advisers) Regulations, 2013. It ensures that advisers adhere to prescribed standards of conduct, disclosure, and client protection.

The updated Master Circular mandates that audits be completed within six months of the financial year-end, with reports and any adverse findings submitted by October 31 annually. Also, SEBI has revised the requirement for client-level segregation compliance certificates, allowing them to be issued by ICAI, ICSI, or ICMAI members or auditors.

Industry observers note that cost accountants bring specialized expertise in financial management, cost analysis, and regulatory compliance. Their inclusion could enhance audit quality, offering a broader perspective on operational efficiency and risk management within advisory practices.

As the March 25, 2026, circular takes effect, investment advisers are advised to review their audit arrangements and engage with the newly eligible professionals.

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