Regulatory & Compliance Risk Reviews

It is an independent assessment of your organisation's exposure to breach of the laws, regulations, and licence conditions that apply to it — followed by a prioritised remediation plan. We map every regulator you answer to, test whether controls exist and actually operate, rate each gap by severity and likelihood, and present a risk register the board can act on.

No — it is a voluntary, board- or audit-committee-driven engagement, unlike a statutory audit which is mandatory under the Companies Act for every company. That said, listed entities and RBI-regulated entities such as NBFCs face governance expectations under SEBI LODR and RBI's risk-based supervision approach that make a structured compliance risk process a practical necessity even without an explicit statutory mandate to commission this specific review.

Internal audit typically executes an approved audit plan covering specific processes or functions over a rolling cycle, often with an operational and financial-control lens. A regulatory and compliance risk review is narrower in one sense — it focuses specifically on legal and regulatory breach exposure — and broader in another, because it covers every applicable regulator across the entire entity in a single exercise rather than one process at a time. Many clients use both: internal audit for ongoing process assurance, and a periodic regulatory risk review for a comprehensive regulatory exposure snapshot.

A full-scope review for a mid-sized entity with a moderately complex regulatory footprint typically takes 8–10 weeks from scoping to board presentation. Larger groups with multiple states, sectors, or cross-border (India-UAE) structures take longer, given the wider compliance universe to map and test. Remediation support and re-testing are scoped separately, usually over a 90–180 day follow-on period.

We draw on COSO's Enterprise Risk Management framework and ISO 31000 risk management principles as the methodological backbone, adapted specifically to the Indian (and, where relevant, UAE) regulatory environment rather than applied as a generic global template. Each finding is rated on a severity × likelihood matrix so the risk register is directly usable by the board, not just a narrative report.

Both. PNPC has operating offices in Chennai, Bangalore, Hyderabad, and Dubai. For groups with an India-UAE footprint, we map the compliance universe on both sides under one engagement — India-side FEMA, GST, Companies Act, sector regulators, and UAE-side trade licence conditions, UAE Corporate Tax, and VAT compliance for applicable UAE entities (with any legacy Economic Substance Regulations filings reviewed for periods before ESR obligations were withdrawn for financial years from 1 January 2023 onward) — plus the cross-border interaction between the two (transfer pricing, intercompany agreements, DTAA implications).

We report it factually and immediately flag it as a priority item — we do not sit on a material finding until the final report. Depending on severity, we discuss with the audit committee or promoter the appropriate next steps, which may include voluntary disclosure to the regulator, engaging specific legal counsel for a compounding or settlement process, or an accelerated remediation timeline. Our role is to identify and help remediate — not to represent the company adversarially before the regulator, which remains a matter for specialist legal counsel where required.

We structure the document request and interview schedule around your compliance universe specifically, rather than sending a generic 200-item request that burns your team's time on irrelevant items. Interviews are typically 45–60 minutes per process owner, scheduled in advance. Most clients report the disruption as manageable — comparable to a focused internal audit rather than a full financial statutory audit.

Each finding is rated on two axes — the likelihood of the risk materialising (based on current control state and historical pattern) and the severity of consequence if it does (ranging from monetary penalty, to licence suspension or cancellation risk, to personal liability for directors and KMPs, to reputational and investor-confidence impact). The combination produces a priority ranking so the board can allocate remediation resources to the highest-impact items first rather than treating every finding as equally urgent.

Both, depending on scope. The base engagement produces the risk register and remediation roadmap. Many clients extend the engagement into a remediation support phase — where PNPC directly assists in drafting missing SOPs, setting up compliance trackers, structuring FEMA or sector-specific reporting processes, and other concrete fixes — followed by independent re-testing to confirm closure. We scope this explicitly upfront so there is no ambiguity about what is included.

Fees depend on the size and complexity of the compliance universe — number of states of operation, number of regulators involved, whether cross-border (UAE or other) entities are in scope, and whether remediation support is bundled in. PNPC provides a written scope and fee proposal after the initial scoping conversation, before any chargeable work begins.

Ideally the audit committee chair or an independent director, with the CFO or company secretary as the operational coordinator. Having the review report to the audit committee (rather than solely to management) preserves the independence that gives the findings credibility — both internally and with any external party (investor, regulator) who later reviews the process.

It depends on your regulatory footprint and the sophistication of your incoming investor. A pre-seed or seed-stage startup with a narrow regulatory footprint (GST, income tax, basic Companies Act compliance) may not need a full formal review — proactive compliance hygiene through your CA firm is often sufficient. A Series A or later company, particularly one with multiple state operations, any regulated-sector element (fintech, healthtech, edtech data handling), or a lead investor who runs formal ESG/governance due diligence, benefits materially from getting ahead of that diligence with an internal review first.

SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations prescribe specific, mandatory governance and disclosure obligations for listed entities — composition of the board and committees, related party transaction approvals, disclosure timelines, and more. A Regulatory & Compliance Risk Review is broader — it assesses exposure across all applicable laws, of which LODR compliance for a listed entity is one significant component, tested alongside GST, FEMA, labour law, and sector-specific regulatory exposure.

A regulatory risk review is not a substitute for a direct, timely response to an active notice or inspection — that needs immediate, specific representation, often with legal counsel, on the exact issue raised. However, once the immediate matter is being handled, a broader risk review is often commissioned to check for adjacent exposure the specific notice may have surfaced — because a regulator flagging one gap is a signal, not necessarily an isolated finding.

Where PNPC is the incumbent CA firm handling ongoing compliance for a client, we are transparent about that relationship in the engagement scope and, where genuine independence is required (for example, in a board-level assurance context similar to statutory audit independence expectations), we structure the review team to be separate from the team handling the client's regular compliance work, consistent with how we handle statutory audit independence for existing advisory clients.

The Digital Personal Data Protection Act 2023 (DPDP Act) is India's data protection legislation, establishing obligations for entities that process personal data — consent requirements, data breach notification, and accountability obligations, with implementing rules being progressively notified and enforcement provisions phased in. For entities that process meaningful volumes of personal data (customer data, employee data, digital platforms), we factor DPDP readiness into the compliance universe as an emerging and increasingly material risk area, even where enforcement timelines are still evolving.

We assess IT general controls and data governance at a level relevant to regulatory compliance exposure — for example, whether access controls, data retention, and breach-notification processes meet applicable regulatory expectations (including DPDP Act obligations and, for regulated financial entities, RBI IT governance directions). A full technical cybersecurity penetration test or deep IT security audit is a distinct, more specialised engagement that we can coordinate alongside this review through appropriate technical partners where the entity's risk profile calls for it.

ESG (Environmental, Social, Governance) risk covers exposure related to environmental compliance, labour and social practices, and governance standards — increasingly subject to formal disclosure requirements such as SEBI's Business Responsibility and Sustainability Reporting (BRSR) framework for the top listed companies by market capitalisation. A standard regulatory and compliance risk review covers the legal and licensing dimensions of ESG (environmental clearances, labour law compliance, governance structure) but a dedicated ESG Risk Assessment or BRSR assurance engagement — offered separately under our ESG & Sustainability Assurance service line — goes deeper into ESG-specific metrics, targets, and disclosure quality.

A compliance checklist tells you whether an item is done or not done — a binary status. A risk register goes further: it captures the underlying risk, its likelihood and severity if not addressed, the control (or absence of one) currently in place, the residual risk after considering that control, an assigned owner, and a remediation timeline. It is a living management tool the board can use to prioritise and track — not a static point-in-time list.

It depends on scope. If the review's compliance universe genuinely covers the subsidiary's specific regulatory footprint (its own state registrations, sector licences, and local obligations) and not just a group-level or parent-entity-focused scope, the subsidiary board can rely on it as part of its own governance evidence. We recommend explicitly confirming subsidiary-level scope coverage at the outset rather than assuming a group-level review automatically captures every subsidiary's specific exposure.

In our experience, the highest-severity findings most often arise from three patterns: expansion into a new state or sector without updating the compliance universe to match, a key compliance-owning employee leaving without proper handover of institutional knowledge about what is tracked and how, and cross-border (India-UAE or other) transactions where FEMA reporting or transfer pricing documentation was assumed to be someone else's responsibility on the other side.

Most clients settle into either an annual refresh aligned with their board's risk governance calendar, or a 24-month cycle for smaller entities with a stable, simple regulatory footprint — supplemented by event-triggered mini-reviews whenever there is a material change (new state entry, new sector, M&A, or a significant regulatory notice). A review that is never refreshed loses relevance as regulations change and the business itself changes.

Yes, for entities with any cross-border shareholding, investment, or transaction — FDI reporting (FC-GPR, FC-TRS), Overseas Direct Investment (ODI) reporting under the FEMA Overseas Investment Rules 2022, External Commercial Borrowings if applicable, and Annual Performance Report filings for any overseas entities are all mapped into the compliance universe where relevant to the client's structure.

We share draft findings with the relevant process owners specifically so factual disagreements can be raised and resolved before the report is finalised — for example, if a document exists but was simply not provided during document collection, that changes the finding. Genuine differences of professional judgement on risk rating are discussed directly with the audit committee as part of the final presentation, with both the finding and management's response documented transparently.

Yes — closely-held companies carry the same regulatory exposure as any other company (MCA filings, GST, labour law, sector licences) and directors carry the same personal liability risk under provisions like Section 164 of the Companies Act for filing defaults. The absence of external investors removes one trigger (investor due diligence) but does not remove the underlying regulatory risk, which is often less actively monitored precisely because there is no external party pushing for governance discipline.

The methodology (compliance universe mapping, control testing, risk rating) is broadly similar in structure across reputable providers — this is a well-established discipline, not a proprietary secret. The difference is in engagement model: PNPC has been a practising CA firm since 1986, with direct India-UAE operating presence, and we stay engaged through remediation and re-testing as a continuing relationship rather than handing over a report and moving to the next client. Fee structures also tend to be more proportionate for mid-sized entities than large consulting firm rate cards.

Yes, in many cases. Lenders — particularly for larger credit facilities — increasingly ask for evidence of governance and compliance risk management as part of their credit assessment or ongoing covenant monitoring. A recent, well-documented regulatory risk review with a credible remediation track record can support this, though the specific format a lender requires should be confirmed with them directly, as requirements vary by lender and facility size.

It becomes the working document for ongoing governance — reviewed at each subsequent board or audit committee meeting to track closure progress, updated as new regulations emerge or the business changes, and used as the baseline for the next cyclical or event-triggered review. Clients who treat it as a living document get materially more value than those who file the final report away and revisit it only at the next full review.

We can include a findings walkthrough and process-owner briefing as part of the engagement, so the teams responsible for each compliance area understand not just what the gap is but why it matters and how to prevent recurrence. A dedicated, structured training programme for compliance or finance teams is available as a separate scope item if the client wants a more formal capability-building component beyond the review itself.

This varies enormously by entity size and prior compliance maturity — a business with an established compliance function might see a roadmap of 10–15 items, mostly minor procedural improvements, while a rapidly scaled business with an ad hoc compliance history might see 40–60 items spanning multiple severity levels. What matters more than the raw count is the prioritisation — a well-structured roadmap makes clear which 5–10 items genuinely need board-level attention this quarter.

Yes — this is one of the more valuable uses of the engagement. Rather than waiting for a new regulation (such as the labour codes' phased implementation or DPDP Act rules) to take effect and then discovering a gap, we can run a focused, forward-looking readiness assessment against the specific upcoming requirement, giving the business lead time to build the necessary controls or processes before the compliance obligation becomes live.