Archive · 2 Jun 2025
SEBI Issues New Guidelines for MII Internal Audits
SEBI, the financial market regulator, has introduced new rules for how financial institutions are audited.
These institutions, like stock exchanges, must now have an internal audit every year, handled by an independent firm.
This firm will report directly to the audit committee, which will exclude the managing director.
The audit committee also approves the scope and guidelines for the audit.
Auditors and key managers can present at meetings but can't vote.
This aims to make these financial institutions more transparent and accountable.
SEBI issued guidelines to strengthen governance at market infrastructure institutions (MIIs).
MIIs must conduct internal audits of all functions at least once per financial year.
Internal auditors must be from independent audit firms and report only to the audit committee.
The audit committee must approve the scope of the audit and the terms of reference.
No executive directors, including the managing director, can be members of the audit committee.
- Who
- The Securities and Exchange Board of India (SEBI).
- What
- SEBI released guidelines for internal audit mechanisms at market infrastructure institutions (MIIs).
- When
- The new framework will come into effect 90 days after the circular's issuance.
- Where
- Mumbai
- Why
- To strengthen the governance mechanism and ensure efficient, transparent operations at market infrastructure institutions (MIIs).
- Regulatory Body
- SEBI
- Target Audience
- Market infrastructure institutions (MIIs) – stock exchanges, clearing corporations, and depositories
- Internal Audit Frequency
- At least once per financial year
- Internal Auditor
- Independent audit firms
- Auditor Reporting
- Reports solely to the audit committee
- Audit Committee Composition
- No executive directors, including MD
