This is to inform that all trading members are required to carry out complete internal audit for the half year ended March 31, 2024 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. Attention of members is also drawn to Annexure A of Exchange notice no. 20231003-61 dated October 03, 2023, regarding the revised eligibility criteria for internal auditors qualified to conduct the internal audit of Trading Members from half year ended March 31, 2024 onwards.
Further, Members’ attention is also drawn to Exchange Notice No. 20231215-55 dated December 15, 2023, and Exchange Notice No. 20240304-60 dated March 4, 2024, on " Framework for Empanelment of Auditors for conducting Internal Audit of Trading Members". As mentioned in these Notices, the Exchange shall accept the internal audit report certified by empaneled auditor only with effect from the half year ending March 31, 2024, onwards. The detailed procedure for empanelment of auditors has been prescribed in these Notices.
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 March 31, 2024, the due date is May 31, 2024. 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 notices that may be issued by the Exchange from time to time.
Members’ attention is drawn to Exchange notice no. 20220623-52 dated June 23, 2022, wherein the members were informed to submit an undertaking to the exchange on a half yearly basis along with Internal Audit Report confirming that the penalty levied by clearing corporations on account of “short/non-collection of upfront margins from clients” has not being passed on to respective clients under any circumstances. Accordingly, the facility to submit the same has been provided while entering the Auditor Details under the Internal Audit Report link on BEFS. The undertaking submitted by the member shall be digitally signed by the proprietor or partner or the designated director of the company. Member shall not be able to submit the Auditor details on BEFS unless the said undertaking is submitted on BEFS.
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”, “No. of instances where non-compliance is observed”, “% 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 March 31, 2024
- Internal Audit Certificate – Annexure I
- Format for Internal Audit Report – Annexure II
- Guidelines on Sample selection & other points to be noted – Annexure III
- List of Indicative Processes & references of SEBI/Exchange circulars – Annexure IV
- Procedure for empanelment for the auditors for conducting the internal audit of trading members – Annexure V
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 March 31, 2024. 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.
Richa Ghosh Anuja Rane
Asst. Gen. Manager Asst. Manager
Inspection Inspection |