Sebi directs AMCs to form audit committee from August
PremiumThe audit committee of the AMC will be responsible for oversight of financial reporting process, audit process, company’s system of internal controls
Capital markets regulator Sebi (Securities and Exchange Board of India) haa directed asset management companies (AMCs) to constitute an audit committee from 1 August.
The audit committee of the AMC will be responsible for oversight of financial reporting process, audit process, company’s system of internal controls, compliance to laws and regulations and other related process, with specific reference to operation of its mutual fund business.
Earlier, a working group constituted for revamp of mutual fund regulations suggested audit committee at AMC level and the proposal was discussed in the mutual fund advisory committee (MFAC) and the body recommended the same.
Taking into account the recommendation of MFAC and the feedback received from the industry, Sebi has directed all AMCs of mutual funds to form an audit committee.
The audit committee will be mandated to review the financial reporting processes, the system of internal controls and the audit processes for the mutual fund operations of the AMC and ensure that the rectifications, if any, suggested by internal and external auditors, etc. are acted upon.
Further, the committee will have minimum three directors as members and at least two-third members of will be independent directors of AMC. The members will be appointed by the Board of AMCs.
The chairperson of the audit committee must be an independent director and he or she should call atleast four meetings in a financial year and not morethan one hundred and twenty days must elapse between two meetings.
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Sebi said the internal auditor will have submit its report to the audit committees of AMC and the Board and the committee will forward their observations on internal auditreport, if any, to the trustees.
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