A Deadline Structure Worth Internalising Precisely
The annual compliance audit isn't a single date on your calendar — it's a sequence of three distinct deadlines, and missing the sequencing (even while eventually completing everything) creates its own compliance finding.
The Three-Deadline Structure
- Complete the audit — within 6 months of financial year-end (Regulation 19(3))
- Submit the audit report to IAASB/SEBI — within 1 month of the audit report's date
- Submit adverse findings and action taken — within 1 month of the audit report, but in any case not later than 31 October for the previous financial year
What the Audit Actually Covers
A genuine IA compliance audit reviews adherence to every applicable provision of the IA Regulations and Master Circular — not a sample selection of "important" items. In practice, this means the audit needs to test: registration and eligibility maintenance, client agreement/MITC compliance, risk profiling documentation, fee structure and cap adherence, client-level segregation, record-keeping completeness, website/display compliance, and grievance handling — essentially every topic covered across this article series, examined together as a single, integrated compliance position.
Preparation Checklist — What to Have Ready Before the Auditor Starts
- Complete client agreement files — signed agreements and MITC acknowledgements for every active client
- Risk profiling documentation — completed profiles with documented client consent for every client, not just new ones onboarded in the audit period
- Fee computation records — evidence that AUA/fixed fee calculations for every client stayed within applicable caps throughout the year
- Segregation evidence — documentation supporting your client-level advisory/distribution segregation, including the separate auditor's certificate this specific requirement demands
- Record-keeping trail — communication records, advice documentation, and (where applicable) call-recorded execution instructions, retained per the 5-year minimum
- Website and display compliance snapshot — current screenshots/evidence of correct SEBI-registered name, disclaimer, and complaint-data disclosure
- Prior year's adverse findings and action taken — evidence that any issues flagged in the previous audit cycle were actually remediated, not just noted
Where Practices Most Commonly Lose Points
In our experience conducting and reviewing these audits, the recurring gaps aren't exotic — they're the same handful of items across most practices: risk profiles missing documented client consent (not just the completed questionnaire), advance-fee refund/breakage calculations not properly documented for clients who terminated mid-period, and the segregation auditor's certificate treated as an afterthought rather than a distinct, properly evidenced deliverable.
Why Starting Preparation Early Matters More Than It Seems To
Given the 6-month completion window and the subsequent 1-month reporting deadlines, practices that begin preparation only close to the 6-month mark routinely find gaps that need remediation before the audit can even properly proceed — starting a genuine internal readiness review at least 2 months before the completion deadline gives enough runway to fix documentation gaps rather than simply disclosing them as findings.
Conducting and Preparing for Your Compliance Audit
We conduct annual compliance audits for Investment Advisers, and separately offer pre-audit readiness reviews for practices wanting to identify and fix gaps before the formal audit process begins.
Coming up on your compliance audit deadline and want a readiness review first, or need the audit itself conducted? Talk to Anuj Desai & Associates.
This article is for general informational purposes and does not constitute a substitute for a formal compliance audit conducted for your specific practice.