SEBI, through Circular HO/38/12/12(1)2026-MIRSD-SEC-FATF/I/7934/2026 dated March 25, 2026, has clarified the eligibility of members of the Institute of Cost Accountants of India to conduct annual audits of Research Analysts. This guide explains the clarification and its implications.
Background
Original Provision
The Master Circular for Research Analysts dated February 06, 2026 provided that a member of Institute of Chartered Accountants of India (ICAI) or Institute of Company Secretaries of India (ICSI) could conduct annual audit of an RA.
Representation
The Institute of Cost Accountants of India (ICMAI) made a representation highlighting that under Regulation 25(3) of the RA Regulations, Cost Accountants are recognized to conduct annual audit of RAs.
Recognition
Regulation 25(3) of the RA Regulations provides that research analyst or research entity shall conduct annual audit from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India and submit the report of the same in such manner as may be specified by the Board.
The Clarification
Modified Provision
The original provision in the Master Circular has been modified to clarify that members of the Institute of Cost Accountants of India are also eligible to conduct annual audits of Research Analysts.
New Paragraph
The paragraph 31 of Chapter VI of the Master Circular has been replaced with:
"Annual audit report and adverse findings, if any: In terms of regulation 25(3) of the RA Regulations, research analyst or research entity shall conduct annual audit in respect of compliance with RA regulations and circulars issued thereunder from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India 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 a period of one month from the date of the audit report but not later than October 31st of each year for the previous financial year."
Audit Requirements
Audit Scope
The annual compliance audit must cover:
- RA Regulations: Compliance with all provisions of RA Regulations
- Circulars: Compliance with SEBI circulars
- Guidelines: Compliance with guidelines issued thereunder
- Client-Level Segregation: Compliance with client-level segregation requirements
Audit Process
The RA must:
- Complete Audit: Complete annual compliance audit within six months from end of financial year
- Submit Report: Submit compliance audit report to RAASB/SEBI
- Timeline: Submit within one month from date of audit report
- Deadline: Not later than October 31st of each year
Publication Requirements
The RA must:
- Website Publication: Publish status of compliance audit report on website
- Adverse Findings: Publish adverse findings of audit, if any, along with action taken
- Client Communication: Provide compliance audit report to clients
Audit Report Requirements
Content
The audit report must specify:
- Each Provision: Each provision of RA Regulations
- Circulars: Each SEBI circular
- Guidelines: Each guideline
- Compliance Status: Compliance status for each requirement
Adverse Findings
If there are adverse findings:
- Action Taken: Action taken to address findings
- Approval: Duly approved by individual RA or management
- Publication: Publish adverse findings on website
- Client Communication: Provide to clients
Client-Level Segregation Certificate
The audit must include:
- Annual Certificate: Annual certificate from auditor
- Confirmation: Confirming compliance with client-level segregation requirements
- Format: Member of ICAI/ICSI/ICMAI or statutory auditor
Practical Implications
For Research Analysts
RAs can now engage:
- Cost Accountants: Members of ICMAI
- Chartered Accountants: Members of ICAI
- Company Secretaries: Members of ICSI
For Auditors
Auditors can:
- Offer Services: Offer audit services to RAs
- Expand Practice: Expand practice into RA audit space
- New Opportunities: New opportunities for cost accountants
Expert Legal Guidance
Anuj Desai & Associates provides expert legal services for Research Analysts on annual compliance audit requirements. Our securities law experts help RAs understand audit requirements, select appropriate auditors, and ensure timely submission of audit reports. We assist in preparing for audits, reviewing audit findings, and addressing any adverse findings.
Comprehensive CTA for All Articles
Disclaimer: This article provides general information and does not constitute legal advice. For specific guidance on your Research Analyst registration, compliance, or any other securities law matter, please consult qualified legal professionals.
Need Expert Legal Guidance?
Navigating the complex regulatory framework for Research Analysts requires experienced legal counsel. At Anuj Desai & Associates, we provide comprehensive legal advisory services for Research Analysts, including:
- Registration and Compliance: Assistance with SEBI registration and ongoing compliance
- Regulatory Advisory: Guidance on SEBI regulations and circulars
- Contract Drafting: Drafting agreements, terms and conditions, and MITC
- Due Diligence: Due diligence for outsourcing, change in control, and other matters
- Representation: Representation before SEBI and RAASB
Contact us for expert legal guidance on your Research Analyst practice.