The Bombay Chartered Accountants' Society (BCAS) has urged the Securities and Exchange Board of India (SEBI) to allow eligible chartered accountant (CA) firms to act as monitoring agencies for smaller fund-raising issues, arguing that the proposed expansion of the monitoring framework could significantly increase the workload and strain existing capacity.
In its representation to SEBI, BCAS suggested that CA firms holding a valid peer review certificate issued by the Institute of Chartered Accountants of India (ICAI), and meeting criteria specified by the regulator, should be permitted to undertake monitoring assignments, at least for issues below a prescribed size.
BCAS president CA Kinjal Shah said in his letter, “With every issue requiring a monitoring agency, the volume of work is expected to increase significantly. Firms of Chartered Accountants holding a peer review certificate are subject to the Standards on Auditing, quality control requirements and the disciplinary jurisdiction of ICAI, and have experience in verifying the application of funds. Permitting such firms to act as monitoring agencies, subject to criteria specified by SEBI, will add to the available capacity”.
Currently, only SEBI-registered credit rating agencies can act as monitoring agencies. The proposal to make their appointment mandatory for all issues, irrespective of size, is expected to substantially increase the volume of work.
BCAS submitted its representation in response to SEBI's consultation paper on monitoring of issue proceeds. It said peer-reviewed CA firms are subject to auditing standards, quality-control requirements and ICAI's disciplinary jurisdiction, and have experience in verifying the application of funds.