Limited Critique Report

A limited critique report is a kind of audit of the financial statements every quarter that the listed companies are mandated to conduct through statutory auditors. Under clause 41 of the Listing Agreement, each listed company must submit the unaudited quarterly report in the designated format.

What is a Limited Critique Report?

A limited critique report refers to auditing financial statements every quarter. Listed companies are required to conduct limited critique reports through statutory auditors. Under clause 41 of the listing agreement, any listed company is obliged to submit the unaudited quarterly report in the specified format. The company must make this submission to the concerned stock exchange within 45 days of the end of the respective quarter. The company shall imply to the Stock Exchange within fifteen minutes of the closure of the board meeting in which unaudited or audited economic statements are placed. Moreover, the company has to publish its economic reports in one well-circulated English newspaper and one regional language newspaper within 48 hours of the board meeting.

What is the scope of the Limited Critique Report?

The scope of the limited critique report is as follows:

• A limited critique report is generally more conservative in scope and scarcely exhaustive than audits.
• In an audit, CA shares the opinion that there is reliable assurance that the financial documents are correct, there are no frauds or errors.
• In a limited critique report, CA declared that "he has no reason to believe that financial statements are materially misstated."
• The audit involves giving a declaration or sharing an opinion, whereas, in a report, the report states that if they have noticed anything wrong or not.

What is the audit procedure for a Limited Critique Report?

The auditors must follow the mentioned procedures to prepare a limited critique report:
Step One: The auditor must comply with all the prescribed requirements relevant to the audit of the organization’s annual economic statements. Such engagement aims to provide an auditor with a conclusion whether, on the grounds of such a report, interim business information is prepared, in all tangible aspects, as per applicable financial reporting structure.

Step Two: The client and the auditor must acknowledge and regulate the agreement terms concerning:
i. The scope and clauses of an agreement
ii. The extent and purpose of such a report
iii. The scope of the liabilities of the auditor
iv. Reliability of the administration
v. The support received
vi. The form and nature of the report

Step Three: When, for the reason of the execution of such a review,
the auditor notified the matter that challenges him to consider that it’s necessary for creating a great adjustment for the addition of interim economic knowledge. He must inform the same to the proper administration level as soon as possible.
In the report of the auditor, if the persons charged with the governance doesn’t competently reply within a reasonable time frame, the auditor may:
i. Alter the report
ii. Release themselves from such agreement
iii. Resign from such assignments to audit the annual business statements.

What are the penal provisions if the Limited Critique Report does not comply?

In non-compliance with certain listing agreement requirements, the Securities and Exchange Board of India (SEBI) vide its circular no. CIR/MRD/DSA/ 31/2013 dated September 30, 2013, have prescribed the following actions to be applicable under the “Uniform fine structure” - 

• For non-compliance with specific requirements of the listing agreement
• The “Standard Operating Procedure” (SOP) for delay and revocation of stoppage of trading in the shares of such listed entities.
• The winding-up of inter-alia specifying the imposition of fines as the action of first resort

The fine involves withholding a promoter's holding and suspending trading in cases of consequent and consecutive defaults.