Can SEBI's rules be imposed on auditors of overseas operations?
KPMG Mauritius resigned as the auditor of UPL's Mauritius arm triggering to company shares slumped heavily after the announcement.
The controversy developed as the Mauritius-based auditor resigned and refusing to officially engage with SEBI, citing an example of creating confusion among Indian companies with global operations. It forces to think of compliance situation … how to hold the auditor in foreign jurisdictions accountable to SEBI regulations on auditor resignations. An auditor resignation can materially harm a company's share price and SEBI has strict guidelines around such resignations.
As per Indian regulations, audit firms must disclose the precise reasons why they were resigning from the audit. However, these regulations do not apply to a Mauritius-based audit firm in this case.
Speculations around the resignations increased after KPMG Mauritius refused to tell the Indian regulator the reason for its resignation, though it is apparently critical for India when many domestic companies were growing globally.
