The Securities and Exchange Board of India vide its notification dated 9th February 2022, has directed the Asset Management Companies of mutual funds to constitute an Audit Committee from 1st August 2022.
The Audit Committee of the AMC shall 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. In this regard, the Audit Committee shall, inter-alia, have the following mandates:
- To review the financial reporting processes, the system of internal controls and the audit processes for the Mutual Fund operations of the AMC;
- To 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 internal auditor shall submit its report to the Audit Committees of AMC and theBoard of AMC. The Audit Committee of AMC shall forward their observations on internal audit report, if any, to the Trustees.
The committee shall be responsible for reviewing periodic report on compliance with applicable laws and regulations, including the details of non-compliance along with the corrective actions, as applicable.
