Frequently Asked Questions (FAQs) – Standardization of the Private Placement Memorandum (PPM) Audit Report
1. Does the audit report need to be mandatorily in the standard reporting format?
Yes, all the PPM audit reports from financial year ended March 31, 2024, need to be filed in the standard reporting format as prescribed by SEBI.
2. Where can this format be found?
The standard reporting format is hosted on the websites of the AIF Associations which are part of the Standard Setting Forum of AIF (SFA) including IVCA.
Link to the format on IVCA website: PPMauditformatrevised120424wGfpJvXctJ3s.xlsx (live.com).
3. Is physical filing also required after online filing on SI portal?
Physical filing has been done away with. All PPM audit report submissions have to be made online only.
4. If already physical filing has been done is that sufficient?
Physical filing will not be considered as a valid submission. The PPM audit report has to be submitted on SI portal only. If physical filing is already done then the same should be resubmitted on the SI portal.
5. Filing has to be done in excel or pdf?
Filing has to be done in pdf only.
6. What all documents should be included in the pdf submission?
The pdf document should comprise of the following:
§ Cover letter duly signed by the Investment Manager of the AIF (Converted into pdf);
§ Letter signed by the auditor along with UDIN (converted into pdf); and Excel sheet for the PPM audit report comprising of ‘Scheme Background’. ‘Audit summary scheme wise’, ‘Audit in detail – for the relevant category of AIF’ (converted into pdf).
Select the scheme from the drop down. Add scheme if the said scheme is not visible in the drop down and thereafter, the PDFs to be uploaded scheme wise.
7. Is there any size constraint for uploading in the SI portal?
The size for uploading of documents is 20 MB (this is a consolidated size hence all documents as stated in point 6 above should be prepared within this size limit).
8. Is the upload of PPM audit report to be done for each scheme under the Trust/AIF separately or consolidated?
Each Trust / Fund has a unique identification. PPM audit report has to be uploaded at scheme level. In case, user has to upload CA certificate for no funds raised, the user can upload under the same tab by selecting the appropriate dropdown in report type list.
9. Does Category III AIF also need to submit a blank sheet for Cat I & II as per the format?
The relevant category of AIF can only fill in the audit report for the particular category and not for other. For a Category III AIF, the sheet on ‘Audit in details – Cat I & II’ can be deleted while consolidating and vice versa.
10. For AIFs who have not raised funds, is the ‘no funds raised’ certificate to be submitted physically?
All filings have to be done online only for PPM audit from March 31, 2024 onwards. The SI portal is enabled for filing no funds raised certificate on the SI portal. In such case, user has to upload CA certificate for no funds raised, the user may upload under the same tab by selecting the appropriate dropdown in report type list.
11. LVF is exempted from PPM audit if investor consent is in place? Is there any requirement for such document to be uploaded?
Yes, a declaration from the Investment Manager that relevant consent is in place and PPM audit does not apply has to be submitted on the SI portal in PDF format. SEBI may seek further details and evidences of such consent at a later date.
12. Is separate audit report required to be submitted to SEBI?
All reports have to be submitted online. No separate audit report is required to be submitted. SEBI may reach out to the relevant AIF / auditor in case of further details required.
13. Who will file the PPM audit report?
The PPM audit report will be prepared by auditor, but filed by AIF on the SI portal.
14. Is the “Brief Description of the PPM” column in the “Audit in Detail” sheet of the standard reporting format, meant to include all clauses from the PPM?
Yes, the “Brief Description of the PPM” column should provide summary of the contents of the PPM.
15. In some PPMs the write up for various sections is very lengthy and is difficult to prepare a summary. Can an annexure be attached?
Yes, to the best extent the details should be filled in the excel sheet itself. However, where the write up is very lengthy the same can be copied into an annexure and a reference to the annexure can be provided in the relevant rows. The Annexure can be attached to the pdf while uploading, duly ensuring the size constraints.
16. Whether a reference to the clauses in the PPM should be sufficient for the purpose of the “Brief Description of the PPM” column in the “Audit in Detail” sheet?
No, merely providing reference to the clauses in the PPM would not be sufficient. AIFs should provide summary of the clauses of the PPM in the column “Brief Description as per PPM”. Refer point 15 above, for an alternate mechanism in case of lengthy information in the Annexure.
AIFs should ensure in lieu of Annexure the PPM is not enclosed and only relevant details are submitted vide annexure.
17. Whether this column of “Brief Description of the PPM” is to be filled only on exception basis when the auditor has a comment / observation?
No, this column will be required to be filled irrespective of any observation/comment/adverse remark by the auditor. Any such comment/observation from the auditor is required to be captured under the column “Observation/Deviation in Detail” as provided under “Audit in Detail” sheet.
18. Which version of PPM has to be used for PPM audit?
The PPM version of March has to be used for audit.
19. Where the Capital Commitment has been received but funds are not drawn down as on March 31, is the PPM audit required to be undertaken?
Para 2.4.3 of SEBI Master Circular dated May 7, 2024, bearing no. SEBI/HO/AFD1/AFD-1-PoD/P/CIR/2024/39, requires that if no funds are raised then a certificate from a chartered account confirming ‘no funds’ have been raised be submitted within 6 months from the end of the financial year.
Accordingly, if only Capital Commitment is received and no funds are received, a no funds received certificate can be submitted. This certificate has to be submitted online on SI portal and not physically.
20. Where the Capital Commitment and funds have been received but initial closing not declared as on March 31, is the PPM audit required to be undertaken?
As referred to in point 19 above, a PPM audit has to be undertaken if funds have been raised. If Capital Commitment amount has been drawn down and funds are received by the AIF, the PPM audit applies.
21. The Fund was launched post March 31 and initial closing undertaken post March 31. Will the PPM audit apply?
PPM audit applies only if funds have been raised on or before March 31. Where the AIF is launched post March 31 the PPM audit does not apply. This audit should be undertaken for the next financial year.
However, a no funds raised certificate has to be submitted on the SI portal.
22. In case of certain AIF, before the standardised PPM format was released and they have not updated to the new format, how is the PPM audit report to be prepared under such case?
The PPM audit report format can be prepared for the relevant sections which form part of the new PPM format. Do not delete any rows while preparing the audit report format. Where certain sections do not form part of the old PPM, specify that the PPM is as per old format.
In the comments section or in the row titled ‘Any other observation that the Auditor may like to mention’ the relevant facts can be captured for old version of PPMs.
23. If the fund is wound up during 2023-2024, still PPM audit to be done till the date of winding up?
Yes, the PPM audit should be conducted till the date of winding up.
24. If the fund is under liquidation period still audit has to be done?
Yes, the PPM audit has to be undertaken for AIFs who are under liquidation period till such time it is not wound down.
25. If the fund is matured post March but before the commencement of audit? Should the audit be conducted?
Yes, if the AIF is existing as on March 31 of the financial year, then audit has to be mandatorily conducted.
26. If the fund is liquidated but some expenses are left, still the audit has to be done?
Yes, if the fund is not completely wound up then the PPM audit has to be undertaken.
27. If the 12-month period from the date of approval has expired and the scheme is still not launched. Does PPM audit apply?
Since the approval of the scheme is not valid, the PPM audit will not apply.
28. There are certain sub section in the PPM audit format which are not part of the PPM format prescribed by SEBI? Is that mandatory to be included in the PPM.
The PPM format has not been revised. The intent of the PPM audit format is to understand that if such clause exists in the PPM then compliance vis-à-vis such clause is undertaken.
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