NSE issues circular on Internal Audit of Trading Members/ Clearing Members.


The National Stock Exchange of India on 14th October 2022, directed all Trading Members/ Clearing Members to carry-out a complete Internal Audit for the half year ended September 30, 2022 and submit the report electronically through the Inspection module in the Member Portal.

The Audit shall be conducted only by independent qualified Chartered Accountant or Company Secretary or Cost & Management Accountant who is in practice and does not have any interest in or relation with the Member other than the Internal Audit assignment.

NSE in its earlier notification, prescribed that the trading member shall submit an undertaking to Exchange on 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” is not being passed on to respective clients under any circumstances.

Accordingly, the facility to submit the same has been provided under ‘Internal Audit Tab’ in member portal. The undertaking submitted by the member shall be digitally signed by the proprietor or partner or the designated director of the company. Internal Auditor shall not be able to submit the Internal Audit Report unless the said undertaking is submitted by member.

Further the Internal Auditors are advised to take note of below while carrying out the Audit:

  • Exchange has made available the data submitted by members to Exchange towards Enhanced Supervision, List of Bank/ Demat Accounts reported and other weekly submissions such as client level cash & cash equivalent balances, bank account balances, Holding Statement for the sample dates/ period in the respective Auditor’s login for the purpose of verification.
  • Details of sample dates/clients applicable for certain checklist points have been made available in respective Auditor’s login to enable the auditor to select samples. Auditors are advised to get their registration done from members and retrieve the aforesaid data and samples from their respective logins before initiating the audit.
  • There are certain changes in the sampling criterion and methodology for sample selection compared to previous half year submission.
  • 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. Further, for each “Not Applicable” Points, appropriate remarks are mandatory to be provided.
  • The auditor shall verify and certify the “Inventory of Assets” data submitted by the members in member portal (ENIT-INV-ASSETS-AUDITOR). The auditor shall not be able to submit the Internal Audit Report without certifying the same.

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