SEBI mandates half yearly internal audit for credit rating agencies

SEBI vide circular SEBI/MIRSD/CRA/Cir-01/2010 dated January 06, 2010 has mandated a half yearly internal audit for credit rating agencies (“CRA”). This should be conducted by Chartered Accountants, Company Secretaries or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA. The scope of the audit includes all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, rules and regulations made thereunder, and guidelines issued by SEBI from time to time.

The CRA should receive the report of the internal audit within two months from the end of the half-year. The Board of Directors of the CRA should consider the report and take steps to rectify the deficiencies, if any, and the CRA should send an ‘Action Taken Report’ to SEBI within next two months.

A copy of the circular is available here.