Sebi lessons for internal auditors to check stock brokers books

Written by Markets Bureau | Mumbai | Updated: Jan 23 2009, 06:01am hrs
Taking a leaf from Satyam scam, National Institute of Securities Market (NISM), an initiative of Sebi, has started a nationwide training programme for the internal audit of the stock brokers. The programme aims at helping the audit professionals to carry out an effective internal audit of the brokers books in order to satisfy the requirements of Sebi and the exchanges.

According to a senior officials of NISM, the programme is meant for the chartered accountants, cost accountants and company secretaries. The NISM, in co-ordination with Bombay Stock Exchange (BSE) & National Stock Exchange (NSE), is offering the programme. The programme faculty has been drawn from Sebi, BSE and NSE. Each programme session would be carried for two days.

The sessions discusses audit procedure and areas that the auditor should examine with references to what books, documents and data are to be checked.

The two-day programme has been started in Kolkata, New Delhi, Chennai and Mumbai which will be expanded to other cities too gradually.

It may be mentioned here that Sebi has issued circulars asking the stock exchanges to direct stock brokers, trading members and clearing members to carry out complete internal audit on a half yearly basis by the chartered accountants, company secretaries or cost and management accountants who are in practice and who do not have any conflict of interest. NISM has started this programme from January 9, 2009 which will continue in stages till mid-February.

The periodical audit is one of the means to ensure compliance standards among stock brokers of the exchanges. The scope of audit should cover the existence, scope and efficiency of the internal control system, compliance with the provisions of the Sebi Act, 1992, Securities Contracts (Regulation) Act, 1956, Sebi (Stock brokers and Sub- brokers) Regulations, 1992, circulars issued by Sebi, agreements, KYC requirements, Bye-Laws of the exchanges, data security and insurance in respect of the operations of the stock brokers and clearing members.