SEBI allows Cost Accountants to conduct annual audits of Research Analysts
The Securities and Exchange Board of India has issued a key clarification that widens the pool of professionals authorised to carry out annual compliance audits of Research Analysts (RAs). Through its circular dated March 25, 2026, SEBI has confirmed that members of the Institute of Cost Accountants of India (ICMAI) are now eligible to perform these mandatory audits, alongside members of the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).
This change has been formalised by modifying paragraph 31 of Chapter VI of the SEBI Master Circular for Research Analysts dated February 06, 2026. The revised position not only broadens professional participation but also reinforces the regulatory expectations regarding the timelines, format, and disclosures connected with the annual audit process for RAs and research entities.
Background and regulatory context
Master Circular framework for Research Analysts
SEBI had earlier consolidated directions for RAs in the Master Circular for Research Analysts dated February 06, 2026. This Master Circular serves as a single reference document for:
- Procedural requirements
- Reporting obligations
- Ongoing compliance standards
- Audit and review norms
Within this framework, paragraph 31 of Chapter VI originally specified that the annual compliance audit of an RA could only be conducted by:
- A member of Institute of Chartered Accountants of India, or
- A member of Institute of Company Secretaries of India
This positioning effectively limited the eligible audit professionals to Chartered Accountants and Company Secretaries for the purposes of verifying adherence to the SEBI (Research Analysts) Regulations, 2014 and the circulars issued under those regulations.
Role of Regulation 25(3) of RA Regulations
The regulatory basis for annual audits of RAs is found in Regulation 25(3) of the SEBI (Research Analysts) Regulations, 2014. This provision mandates that RAs and research entities undergo an annual audit in respect of their compliance with:
- The substantive RA Regulations, and
- All circulars and directions issued under those Regulations
SEBI noted that Cost Accountants are recognised under this regulatory framework for the purpose of conducting such audits. This recognition, coupled with formal representations from the Institute of Cost Accountants of India, prompted the regulator to align the Master Circular text with the underlying Regulations.
SEBI clarification on eligibility of Cost Accountants
Inclusion of ICMAI members as eligible auditors
Upon examining the representations and the legal position under Regulation 25(3) of the RA Regulations, SEBI has now expressly confirmed that:
- Members of Institute of Cost Accountants of India
are also eligible to conduct annual compliance audits of RAs.
Accordingly, paragraph 31 of Chapter VI of the Master Circular has been substituted to clearly include ICMAI members along with ICAI and ICSI members.
The revised paragraph now states that the annual audit must be conducted by a member of:
- Institute of Chartered Accountants of India, or
- Institute of Company Secretaries of India, or
- Institute of Cost Accountants of India
This alignment removes earlier ambiguity and provides a wider choice of qualified professionals to RAs and research entities.
Effective date and applicability
SEBI has specified that:
- The provisions of the March 25, 2026 circular apply from the date of issue of the circular itself.
- All registered Research Analysts and research entities, as well as the Research Analyst Administration and Supervisory Body (RAASB), must take note of and implement these changes prospectively.
Revised compliance audit requirements for Research Analysts
The modified paragraph 31 sets out a detailed framework governing the annual compliance audit of RAs and research entities. The requirements can be organised into four broad components:
- Who can conduct the audit
- When the audit must be completed
- How and when the audit report must be submitted
- Disclosure of audit status and findings