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Audit & Assurancevia BSE SME / NSE Emerge (exchange-level DRHP review)

SME IPO Peer Reviewed Auditor Certificate — SEBI SME IPO

Chartered Accountant peer reviewed auditor certificate for SME IPO — mandatory SEBI requirement for issuers on BSE SME or NSE Emerge platforms, covering restated financials, working capital certificate, and ICAI peer review compliance.

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STARTING FROM₹29,999
TYPICAL TIMELINE21 days
DOCS REQUIRED5 documents
APPLICABLE TOCompany

Regulatory Framework

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, Chapter IX: SME IPO framework — simplified listing on BSE SME or NSE Emerge; post-issue paid-up capital not exceeding ₹25 crore (BSE SME) or ₹10 crore (NSE Emerge); exchange-level review of offer document. Schedule VI: restated financial information requirements — auditor certificate mandatory. ICAI Council Guidelines No. 1-CA(7)/02/2022 (Peer Review Mandate): Chartered Accountants performing audit for SME IPO issuers must hold a valid ICAI Peer Review Certificate issued by the ICAI Peer Review Board; firms without a current certificate are disqualified from signing SME IPO audit reports. SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2022/0045: SME IPO eligibility — operating profit (EBITDA) in any 2 of last 3 financial years; minimum 3 years of existence. ICAI Guidance Note on Auditor's Report in Prospectuses and Offer Documents: form and content of auditor certificates in SME IPO offer documents.

Overview

The SME IPO framework in India, governed by Chapter IX of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations), provides a simplified listing pathway for small and medium enterprises on designated SME platforms — BSE SME and NSE Emerge. Unlike the main board, SME IPOs do not require SEBI's prior approval of the Draft Red Herring Prospectus (DRHP); the offer document is reviewed and processed by the exchange directly. However, the CA certification requirements are materially similar to main board IPOs, with one critical additional requirement: the statutory auditor of an SME IPO issuer must hold a valid ICAI Peer Review Certificate.

The ICAI Peer Review Certificate is a quality assurance mechanism under ICAI's Peer Review Mandate. Under ICAI Council Guidelines No. 1-CA(7)/02/2022 (Peer Review Mandate), Chartered Accountants performing audit functions for SME IPO issuers are required to have their firm's audit quality assessed and peer reviewed by the ICAI Peer Review Board. Firms without a valid Peer Review Certificate are disqualified from issuing audit reports for SME IPO offer documents. This makes the CA's peer review status a critical due diligence item for SME companies planning an IPO.

The CA's deliverables for an SME IPO include: restated financial statements for 3 years (or the period of existence, if shorter) prepared under Schedule VI of SEBI ICDR Regulations; auditor's certificate on restated statements; working capital certificate (certifying that the company has sufficient working capital for 12 months post-issue); auditor's certificate on the basis of issue price (if applicable); and a tax shelter statement where material tax benefits exist.

For SME IPOs below ₹10 crore, only 2 years of restated financial information may be required. The restated financials for SME IPOs follow the same restatement principles as main board IPOs — adjusting for accounting policy changes, correcting prior errors, and eliminating audit qualifications — but SEBI's review is conducted at the exchange level rather than SEBI's head office. The SME issuer company must have post-issue paid-up capital of not more than ₹25 crore for BSE SME (₹10 crore for NSE Emerge), and the company must have been in existence for at least 3 years with operating profit (EBITDA) in any 2 of the last 3 full financial years.

How It Works

  1. 1

    Peer Review Certificate Verification & Engagement

    Confirm that the statutory auditor firm holds a valid ICAI Peer Review Certificate (mandatory for SME IPO auditor under ICAI Council Guidelines No. 1-CA(7)/02/2022). Agree scope of CA deliverables with the merchant banker and the SME exchange.

    Government2-3 days
  2. 2

    Restated Financial Statements (2–3 Years)

    Prepare restated financial statements for the relevant period per SEBI ICDR Regulations Schedule VI. Adjust for accounting policy changes, prior period errors, and eliminate qualifications. For SME IPOs: 2 years for offer size below ₹10 crore; 3 years otherwise.

    Government10-14 days
  3. 3

    Working Capital Certificate

    Certify that the SME issuer has adequate working capital for at least 12 months from the date of the prospectus. This requires analysis of the company's current assets, current liabilities, debtors collection cycle, and cash flow projections.

    Government3-5 days
  4. 4

    Auditor Certificate on Restated Statements

    Issue the Auditor's Certificate on restated financial statements per SEBI ICDR Schedule VI, ICAI Guidance Note on Auditor's Report in SME IPOs, and exchange requirements. Issue tax shelter statement where material tax benefits exist. Issue basis of issue price certificate if required.

    Government3-5 days
  5. 5

    Exchange Filing & Compliance Sign-off

    Liaise with the SME exchange (BSE SME or NSE Emerge) on any queries on the CA certificates. Attend to SME exchange document review. Confirm all CA deliverables are lodged with the exchange and the merchant banker.

    Government3-5 days

Frequently Asked Questions

What is the ICAI Peer Review Certificate and why is it mandatory for SME IPOs?
The ICAI Peer Review Certificate is a quality assurance credential issued by the ICAI Peer Review Board after assessing a CA firm's audit quality, processes, and systems. Under ICAI Council Guidelines No. 1-CA(7)/02/2022, Chartered Accountants performing statutory audit for SME IPO issuers must hold a valid Peer Review Certificate. The exchange (BSE SME or NSE Emerge) will not accept the offer document if the signing auditor's firm does not have a current Peer Review Certificate. The mandate was introduced to ensure audit quality in SME IPO transactions.
How is an SME IPO different from a main board IPO in terms of CA requirements?
The main differences in CA requirements are: (1) Peer Review Certificate mandatory for SME IPO auditor (ICAI mandate) — recommended but not compulsory for main board; (2) SME IPO offer documents are reviewed at the exchange level (BSE SME/NSE Emerge) rather than SEBI; (3) restated financial period may be 2 years instead of 3 for smaller SME IPOs (below ₹10 crore offer size); (4) auditor comfort letter requirements may be simpler; (5) the working capital certification requirement is the same for both tracks.
What does the Working Capital Certificate certify in an SME IPO?
The Working Capital Certificate is a CA-certified document confirming that the SME issuer has adequate working capital — defined as the ability to meet all current and foreseeable obligations — for a minimum period of 12 months from the date of the prospectus. The CA analyses the current ratio, debtors collection cycle, creditor payment cycle, bank working capital limits, and cash flow projections to certify adequacy. The exchange requires this as part of the offer document.
What is the SME IPO eligibility criteria that a CA can help verify?
Under SEBI ICDR Chapter IX and BSE SME/NSE Emerge guidelines, the key eligibility criteria include: (i) post-issue paid-up capital not exceeding ₹25 crore (BSE SME) or ₹10 crore (NSE Emerge); (ii) company must have been in existence for at least 3 financial years; (iii) positive EBITDA in at least 2 of the last 3 full financial years; (iv) net tangible assets of at least ₹3 crore based on the latest audited balance sheet; (v) no winding up petition admitted by any court. The CA's restated financial statements are used to verify criteria (iii) and (iv).
Can a company with losses list on the SME platform?
A company with net losses may still qualify for SME IPO listing if it meets the EBITDA condition — positive EBITDA (operating profit before depreciation, interest, and tax) in at least 2 of the last 3 full financial years — even if net profit is negative due to depreciation, interest, or deferred tax charges. The CA's restated financial statements must clearly present the EBITDA for each year, with the restatement adjustments explained in notes to the restated financials.

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