MCX Circular on-Submission of Half-Yearly Internal Audit Report by Clearing Members (ITCM & PCM)
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Date of Issue: 23-4-2024
Issuer: MCX
Submission of Half-Yearly Internal Audit Report by Clearing Members (ITCM & PCM)
Highlights of MCX Circular dated April 23, 2024
This is further to MCXCCL circular no. MCXCCL/INSP/078/2024 dated April 01, 2024 wherein it was informed that the process for submission of internal audit report (IAR) for the half year ended March 31, 2024 including format of Internal Audit Certificate, Format of Internal Audit Report, Guidelines on sample selection etc. shall be communicated separately through a circular.
Clearing members undertaking clearing activities for at least one trade during the period from October 1, 2023 to March 31, 2024 for other stock-brokers and/or for custodian participants code (their direct trading clients or otherwise) are required to carry out Internal Audit and submit the report to Multi Commodity Exchange Clearing Corporation Ltd.
Further, as advised by SEBI and in order to enhance the ease of doing compliance and reduce operational difficulties faced by Members/Audit Firms, it has been decided that only the auditors empaneled with any of the Exchange(s), shall be eligible to conduct internal audit of the Clearing Members of any of the Clearing Corporations.
The submissions shall be made to the email ID "inspe...@mcxccl.com” with the subject line as “Internal Audit Report- Name of the Clearing Member (Clearing Member Code) – March 2024.’’
Further, Internal Auditors are advised to take note of below while carrying out the Audit:
- In cases where samples have been prescribed, auditors are required to procure the data from the clearing members. Auditors are advised to refer Annexure III carefully before initiating the audit. The samples for parameters/ criteria shall be as per the “Guidelines on sample selection” prescribed in Annexure III and the data required for the same may be sourced from the member.
- For each “Not complied” observation, wherever applicable, the auditor shall mandatorily provide the “no. of instances verified” and “Amount/value involved where non-compliance is observed” while submitting the Report. Further, for each “Not Applicable” Points, appropriate justifying remarks are mandatory to be provided.
- Internal auditors are required to give the details of the sample verified (sample date, shortlisted sample etc) wherever applicable. The formats for the same are given in Annexure V.
- The Internal Audit Certificate (Annexure I) should be digitally signed by the auditor.
- The Annexure
II which is the Format of Internal Audit Report shall be
submitted in excel file and as a PDF document. The PDF version of Annexure
II shall be digitally signed by both the auditor and the
clearing member along with management comments of the clearing member.
Please find enclosed the following Annexures applicable for the Internal Audit Report for half year ended March 31, 2024:
a.) Internal Audit Certificate - Annexure I
b.) Format of Internal Audit Report - Annexure II
c.) Guidelines on sample selection & other points to be noted - Annexure III
d.) List of indicative SEBI/MCXCCL/MCX circulars- Annexure IV
e.) List of samples verified - Annexure V
- Please note that only internal audit report with complete annexures shall be treated as valid submission to MCXCCL.
It is to be noted that the due date to submit the Internal Audit Report is within two months from the end of the half year ended March 31, 2024 that is May 31, 2024.
The penalties/ disciplinary actions for late/ non-submission of the Internal Audit Report shall be as per MCXCCL/INSP/226/2023 dated September 25, 2023. The penalties/ disciplinary action for non-compliances reported in the Internal Audit Report shall be as prescribed by MCXCCL Circular No. MCXCCL/INSP/001/2024 dated January 1, 2024.
In case of any clarification or assistance required in the implementation of this circular, you may contact
Kaushik Jethwa - kau...@secmark.in / 9870210171
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