In an initiative to bolster transparency in financial disclosures, the SEBI has announced a proposal to mandate digital assurances for financial statements of the top-100 listed companies.
According to MoneyLife, set to commence from the financial year 2024-25, this requirement aims to provide a robust framework for transparency and enhance investor trust. The companies targeted by this new rule will need to submit their management statements and auditor’s reports, certified with digital assurances, by 31 July 2025.
The proposed regulatory adjustment is part of SEBI’s ongoing efforts to improve the quality of financial reporting among India’s elite listed entities. According to a recent consultation paper, this initiative will require the production of a separate report on digital assurance. This report is expected to lift disclosure standards, aid in better enforcement, and ultimately secure greater investor protection.
SEBI’s decision follows extensive consultations with market stakeholders and leverages a technical guide prepared by the Auditing and Assurance Standards Board (AASB) and Digital Accounting and Assurance Board (DAAB) of the Institute of Chartered Accountants of India (ICAI). This guide outlines a framework based on information obtained from external data repositories, to be mandated for management statements and independent auditing reports. Notably, auditors engaged in this process must have undergone a peer review process by the ICAI and possess a valid certificate issued by the institute.
The technical guide emphasizes the utilization of external audit evidence and information, clarifying that it does not impose separate reporting requirements on auditors concerning these details. Furthermore, it stipulates that management of the listed entities is not obligated to provide or grant access to such externally obtained information to auditors.
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