SEBI Internal Audit & Net Worth Certification: Documents and Evidence
Most delay on SEBI Internal Audit & Net Worth Certification comes down to paperwork that was not ready, so it is worth knowing what will be asked for. The questions below are the ones raised most often in practice; the full scope of the service is on the SEBI Internal Audit & Net Worth Certification page.
What exactly does the half-yearly internal audit cover?
The audit checklist, as prescribed by the relevant exchange/depository circular, typically covers client onboarding and KYC compliance, segregation of client funds and securities from the intermediary's own funds and securities, margin collection and reporting, contract note and statement of account issuance, running account settlement practices, risk management system (RMS) controls, client complaint handling, and record retention and maintenance requirements.
In practice: Client fund and securities segregation is consistently the area that draws the closest scrutiny — both from us as auditors and from the exchange reviewing the submitted report. Get this right and most of the rest of the audit is a smoother conversation.
What happens if our computed net worth falls below the prescribed minimum?
A net worth shortfall against the prescribed minimum for your registration category is a serious compliance event. It is typically required to be reported, and the intermediary is expected to rectify the shortfall — commonly through additional capital infusion by promoters/partners — within a defined period, after which a revised net worth certificate is required. Continued non-compliance can result in restriction on further business or suspension of the registration in that segment.
In practice: We flag a likely shortfall the moment it becomes apparent during our computation — often weeks before the certificate is formally due — specifically so management has runway to arrange capital infusion rather than discovering the shortfall only when the certificate is about to be signed.
Is the net worth certificate the same for all categories of SEBI intermediaries?
No. The minimum net worth prescribed, and in some cases the precise computation formula, varies by category of registration — trading member, clearing member, depository participant, and other regulated categories each have their own regulatory net worth floor and, in some cases, segment-specific floors within a single category (for example, differing requirements for cash market versus derivatives segment membership).
In practice: We map the applicable minimum net worth for each specific segment you are registered in — rather than applying a single blanket figure — because operating in multiple segments can mean multiple thresholds apply simultaneously.
What documents does the net worth certificate itself typically contain?
A typical SEBI net worth certificate states the basis of computation (referencing the applicable regulation), sets out the computed net worth with a summary of the key adjustments applied to arrive at that figure from the balance sheet base, confirms the figure against the prescribed minimum for the specific registration category and segment, and is signed and stamped by the certifying Chartered Accountant with their membership and Certificate of Practice details.
In practice: We retain the full computation working paper behind every certificate we issue — not just the final certificate — so that if the exchange or depository queries any specific adjustment, we can respond with the underlying calculation immediately rather than having to reconstruct it.
Does the half-yearly audit checklist differ between the cash market segment and the derivatives (F&O) segment?
The core areas — KYC, fund/securities segregation, margins, contract notes, complaints, and record-keeping — are broadly common across segments, but the specific margin computation rules, exposure limit norms, and certain reporting formats differ between cash market, equity derivatives, currency derivatives, and commodity derivatives segments. Where an intermediary operates in multiple segments, the checklist is expanded to cover each segment's specific requirements rather than applying a single generic checklist across all of them.
In practice: We build a segment-specific annexure to the core checklist for every multi-segment client, rather than trying to force one checklist to cover cash, F&O, currency, and commodity activity uniformly — the margin and exposure rules genuinely differ enough between segments to warrant this.
Where this sits in the wider engagement
SEBI Internal Audit & Net Worth Certification rarely arrives on its own. The statutory basis and the current requirements are set out on the SEBI Internal Audit & Net Worth Certification service page, and the related services are grouped under Audit Assurance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On SEBI Internal Audit & Net Worth Certification we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.