Description

SEBI clarifies that members of the Institute of Cost Accountants of India (ICoAI) are eligible to conduct annual audits of Research Analysts, expanding the list beyond ICAI and ICSI members.

Summary

SEBI has issued a clarification modifying the Master Circular for Research Analysts (dated February 06, 2026) to explicitly include members of the Institute of Cost Accountants of India (ICoAI/ICMAI) as eligible auditors for conducting annual audits of Research Analysts (RAs). Previously, only members of the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI) were mentioned.

Key Points

  • Members of the Institute of Cost Accountants of India (ICoAI) are now explicitly eligible to conduct annual audits of Research Analysts.
  • This update modifies Paragraph 31 of Chapter VI of the Master Circular for Research Analysts dated February 06, 2026.
  • The change is based on representations from ICoAI and recognition of Cost Accountants under Regulation 25(3) of the RA Regulations.
  • The circular is effective from the date of issue (March 25, 2026).

Regulatory Changes

Paragraph 31 of Chapter VI of the Master Circular for Research Analysts is replaced to read:

Research analysts or research entities shall conduct annual audits in respect of compliance with RA regulations and circulars from a member of ICAI or ICSI or Institute of Cost Accountants of India within six months from the end of each financial year, and submit a compliance audit report to RAASB/SEBI within one month from the date of the audit report but not later than October 31 of each year for the previous financial year.

The updated paragraph also requires RAs to:

  • Publish the status of the compliance audit report on their website.
  • Publish adverse audit findings along with action taken on their website.
  • Provide the compliance audit report to their clients.

Compliance Requirements

  • Research Analysts (RAs) and Research Entities must now be aware that they may engage a Cost Accountant (ICoAI member) to fulfill their annual audit requirement.
  • Annual audit must be completed within six months from the end of each financial year.
  • Compliance audit report must be submitted to RAASB/SEBI within one month from the audit report date, but no later than October 31 each year.
  • Adverse audit findings and action taken must be published on the RA/research entity’s website.
  • Compliance audit report must be shared with clients.

Important Dates

  • Effective Date: March 25, 2026 (date of circular issuance).
  • Annual Audit Deadline: Within six months from the end of each financial year.
  • Submission to RAASB/SEBI: Within one month of audit report, but not later than October 31 each year.

Impact Assessment

This circular has a low market impact as it is a procedural clarification with no effect on trading or broader market operations. It benefits Research Analysts and research entities by widening the pool of qualified auditors, potentially reducing cost and logistical friction in fulfilling their annual audit obligations. The inclusion of ICoAI members aligns with their statutory recognition under the RA Regulations.

Impact Justification

This is a procedural clarification expanding the pool of eligible auditors for Research Analyst annual audits. It does not introduce new compliance obligations or affect trading/market operations broadly.