Q.36: My query is about annual certificates for client level segregation. The deadline for compliance with this clause was April 1, 2021.

My auditor is of the view that this compliance needs to be met only for FY2022 (and not for FY2021). Thus, no such certificate needs to be procured for FY2021.

Thought of taking an opinion from you.

Do we need to get such annual certificate for FY2021 by September 30, 2021 OR this is applicable only from FY2022 (and thus we will need such a certificate next year only)?

Response:

1. In a way, there is a weight in the contention of your auditor. You may go ahead with such interpretation that Annual Client-level segregation is to be met only for FY 2021-22 and not for FY 2020-21. Accordingly no certificate needs to be procured for FY 2020-21.
2. But a safer interpretation would be to obtain a certificate from Auditor for client-level segregation compliance, starting from FY 2020-21 itself – only thing to be careful is to mention in the certificate “as on 31st March 2021” instead of saying “for the financial year 2020-21”. 

Subsequently, from FY 2021-22 the auditor may mention in the certificate “for the financial year xxxx-xx”.

The safer interpretation is on the logic of:

1. April 1, 2021 is the deadline for IA – to ensure compliance with ‘Client-level segregation’
2. September 30, 2021 is the deadline for IA – to obtain Certification of this said compliance.