This is to inform that all trading members are required to carry out complete internal audit for the half year ended September 30, 2022 and submit the report electronically through the BEFS (BSE Electronic Filing System) member portal. The audit shall be conducted only by independent qualified Chartered Accountants or Company Secretaries or Cost and Management Accountants who are in practice and do not have any conflict of interest in or relation with the member other than the internal audit assignment.
It is to be noted that the due date to submit the Internal Audit Report is within two months from the end of half year i.e., for the half year ended September 30, 2022, the due date is November 30, 2022. The penalties/disciplinary actions for late/non-submission of the Internal Audit Report and non-compliances observed in the Internal Audit Report, shall be applicable as per the Exchange notice no. 20220601-52 dated June 01, 2022, or any other relevant circular that may be issued by the Exchange from time to time.
In partial modification to the Exchange notice no. 20220221-65 dated February 21, 2022, regarding eligibility criteria for internal auditors, Auditor meeting the following eligibility criteria is qualified to conduct the Internal Audit of the Trading Members:
a) The firm or at least one of the partners should have a minimum of 3 years’ experience in carrying out audits.
b) The Auditor/ Audit firm is not debarred or restrained from issuing any certificate by ICAI, ICSI, ICMAI, RBI, SEBI or by other regulator/law enforcement agency.
c) Auditor and/or its employee or partner signing the Internal Audit Report shall have a valid NISM-Series-XIV: Internal Auditors for Stockbrokers Certification or NISM Series III-A: Securities Intermediaries Compliance Certification or ICAI Certificate Course on Financial Markets and Securities Laws or any other equivalent examination.
Further, Internal Auditors are advised to take note of below changes while carrying out the Audit:
- There are certain changes in the sampling criterion and methodology for sample selection compared to previous half year submission. Auditors are advised to refer to Annexure III carefully before initiating the audit.
- For each “Not complied” observation, wherever applicable the auditor shall mandatorily provide the “no. of instances verified”, “% of instances where non-compliance is observed” and “Amount/value involved where non-compliance is observed” while submitting the Audit report.
Please find enclosed herewith the following Annexures applicable for the Internal Audit report for half year ended September 30, 2022
Ø Internal Audit Certificate – Annexure I
Ø Format for Internal Audit Report – Annexure II
Ø Guidelines on Sample selection & other points to be noted – Annexure III
Ø List of Indicative Processes & references of SEBI/Exchange circulars – Annexure IV
As per Exchange notice no. 20191004-46 dated October 04, 2019, all Internal Audit Certificate shall mandatorily contain Unique Document Identification Number (UDIN).
The quality of internal audit reports received from members shall be monitored and appropriate steps shall be taken if the reports do not meet minimum expected quality levels. In case where internal audit report submitted is incomplete and not as per the guidelines like sample size not given, only certificate submitted without report or management comments not given etc., same would be treated as non-submission of internal audit report. Stock brokers are strictly advised to submit the report in the format prescribed by the Exchange.
Auditors are requested to mandatorily adhere to the sample selection guidelines specified therein (Annexure-III) and mention the sample size selected along with details of the instances of non-compliance (if any) against each of the checklist points. All working papers and records with respect to the audit should be retained by the auditors for verification by the Exchange as and when required.
Please be informed that a separate notice shall be issued shortly regarding availability of BEFS for submission of Internal Audit Report for half year ended September 30, 2022. Once BEFS is activated for submission, submission of Internal Audit Report shall be considered complete only after Member submits the report to the Exchange and receives an acknowledgment email. Saved reports/reports submitted by auditor will not be considered as submission.
In case of any queries/clarifications, you may reach us on the following contact details.
For and on behalf of BSE Ltd.
Jyoti Thukral Josephine Baretto
Sr. Manager Manager
Brokers’ Supervision Brokers’ Supervision
|