SEBI has asked AMCs to constitute audit committees by August 1, 2022. These committees, SEBI said, will be responsible to keep a check on AMCs' financial reporting, systems of internal controls, compliance to laws and regulations, among other functions and processes.
The regulator has tasked the Board of Directors of AMCs to appoint the committee, which has to have a minimum of three directors as members. Only an independent director can become the chairperson of the committee.
Once the committee is formed, the internal auditor will have to submit its report to the audit committee and the Board of AMC. If the audit committee makes any observation in the report, it has to inform the Trustees.
SEBI said the decision to constitute audit committees at the AMC level was based on recommendations from the Mutual Fund Advisory Committee.
