ICAI Clarification on Guidelines issued by RBI for Appointment of SCAs/ SAs of Banks UCBs and NBFCs

The Institute of Chartered Accountants of India (ICAI) has issued Clarification on Guidelines issued by RBI for Appointment of SCAs/ SAs of Banks UCBs and NBFCs.

Members are aware that the RBI published a Circular on April 27, 2021, titled “Guidelines for the Appointment of SCAs and SAs of Commercial Banks (Excluding RRBs), UCBs, and NBFCs (including HFCs)”.

We received a communication from the RBI in which it is stated that the RBI and banks have been receiving queries from Chartered Accountants/ Chartered Accountants firms seeking clarification on whether concurrent audit assignments would also fall under the structure of point no. 6.4 when assessing and establishing auditor independence.

Point no 6.4 states as follows:

“6.4 The time gap between any non-audit works (services mentioned at Section 144 of Companies Act, 2013, Internal assignments, special assignments, etc.) by the SCAs/ SAs for the Entities or any audit/ non-audit works for its group entities should be at least one year, before or after its appointment as SCAs/ SAs. However, during the tenure as SCA/SA, an audit firm may provide such services to the concerned Entities which may not normally result in a conflict of interest, and Entities may take their own decision in this regard, in consultation with the Board/ ACB/ LMC.”

The RBI has stated that concurrent audit assignments would also fall under the context of the previously indicated Para 6.4 of the Circular dated April 27, 2021.

Members are asked to take note of this and ensure that it is followed.