The Securities and Exchange Board of India (SEBI) has proposed a significant change in financial reporting—mandating a separate report on digital assurance of financial statements for the top 100 listed companies by market capitalization. This move, applicable from the financial year 2024-25, aims to enhance transparency, strengthen disclosure standards, and build greater investor trust.
What Is Digital Assurance?
Digital assurance refers to the use of technology to validate and audit financial data through digital sources. The Auditing and Assurance Standards Board (AASB) and the Digital Accounting and Assurance Board (DAAB) of the Institute of Chartered Accountants of India (ICAI) had earlier introduced a Technical Guide on Digital Assurance to help auditors incorporate digital data sources in audits. However, this guide did not mandate any separate reporting by auditors or require listed companies to provide access to digital audit data.
SEBI’s latest proposal bridges this gap by requiring a dedicated report on digital assurance, ensuring greater accountability and improved financial disclosures.
Why This Change Matters
- Increased Transparency – Digital assurance reporting will provide more clarity on the financial health of listed companies.
- Stronger Investor Protection – Better disclosure standards will enhance investor confidence.
- Enhanced Enforcement – Regulatory bodies can take more informed actions based on digital audit reports.
Who Will Be Affected?
This requirement will apply to the top 100 listed companies by market capitalization, beginning March 31, 2025. These entities must integrate digital evidence into their financial audits and provide a separate report addressing digital assurance measures.
The Role of Auditors and Companies
With this proposal, auditors will need to adapt to the new reporting requirements by integrating digital assurance into tax audits, income tax declarations, and overall auditing and taxation practices. Companies will also need to ensure that their financial records and digital data align with the updated compliance norms.
How JD Shah Associates Can Help
At JD Shah Associates, we specialize in auditing, taxation, and digital assurance services. Our expert CA team ensures that businesses comply with evolving regulations while maintaining transparency and efficiency in financial reporting. We help organizations navigate tax audits, income tax declarations, and digital assurance compliance smoothly.
As SEBI moves towards more robust financial governance, businesses must stay ahead by adopting digital audit practices. For expert guidance on digital assurance and compliance, connect with JD Shah Associates today!
