SEBI Unveils Digital Assurance Standards for Top 100 Listed Firms Starting 2025

In a significant move aimed at enhancing transparency in financial disclosures, the Securities and Exchange Board of India (SEBI) has proposed a requirement for the top 100 listed companies to implement digital assurances for their financial statements. This initiative, set to take effect from the financial year 2024-25, seeks to establish a solid framework that promotes transparency and fosters investor trust.

New Digital Assurance Requirements

The new regulation mandates that targeted companies submit their management statements and auditor’s reports, all certified with digital assurances, by July 31, 2025. This requirement is part of SEBI’s broader strategy to enhance the quality of financial reporting among India’s leading listed entities.

Objectives of the Initiative

• Improve transparency in financial disclosures.
• Enhance investor confidence in the financial reporting process.
• Establish a high standard of compliance among top companies.

Consultation and Framework Development

This regulatory adjustment was developed following extensive consultations with various market stakeholders. It incorporates insights from a technical guide created by the Auditing and Assurance Standards Board (AASB) and the Digital Accounting and Assurance Board (DAAB) of the Institute of Chartered Accountants of India (ICAI). The guide provides a framework based on external data repositories for management statements and independent auditing reports.

Auditor Requirements

To ensure the integrity of the digital assurance process, auditors involved must:

• Complete a peer review process conducted by the ICAI.
• Hold a valid certificate issued by the ICAI.

Clarifications on Reporting Obligations

The technical guide specifies that while external audit evidence and information should be used, no additional reporting requirements will be placed on auditors concerning this data. Moreover, the management of listed entities is not obligated to provide access to externally obtained information to auditors.

This initiative is expected to elevate the standards of financial disclosures, enhance enforcement measures, and ultimately provide greater protection for investors. For more detailed insights into financial regulations, visit SEBI’s official website.