SEBI has vide its circular dated 27th May, 2016 clarified that there will be a Statement of Impact of Audit Qualifications in lieu of Form A or B that will be required to be attached to the annual audited financial statements to the stock exchanges. This Statement will be applicable only if the audit report is with modified opinion.
If the audit report is with unmodified opinion, then the company has merely to furnish a declaration to that effect.
The format of Statement of Impact of Audit Qualifications is given in Annexure I to the said circular.
The procedures to be followed if the Audit Report is with modified opinion is as follows:
4.3.The management of the listed entity shall have the option to explain its views on the audit qualifications;
4.4.Where the impact of the audit qualification is not quantified by the auditor, the management shall make an estimate. In case the management is unable to make an estimate, it shall provide reasons for the same. In both the scenarios, the auditor shall review and give the comments.
4.5.The aforesaid statements on impact of audit qualifications filed by the listed entities shall be a part of regular monitoring by the stock exchanges as specified in Regulation 97 of the Listing Regulations. In case of non-compliance, the stock exchanges shall take action against such entities as deemed fit and report to SEBI on a regular basis.
The stock exchanges shall coordinate with one another in case the scrip is listed on more than one stock exchange.
This will come into effect for the financial year ended 31st March, 2016.