FMC tightens audit norms

Invites application from audit firms for empanelment, 10 years experience required, fee upto Rs 1 lakh

Tightening the noose on auditors of commodity exchanges and their members, the Forward Markets Commission (FMC) has said those empanelled with it should have at least 10 years of experience in undertaking audits of banks and financial institutions.

In a notice inviting applications for empanelment of firms for audit/inspection of books of accounts of commodity exchanges and their members, the FMC said the applicant should be empanelled with the Comptroller & Auditor General of India and the Reserve Bank of India. In case of a partnership firm, it should have at least four partners, with at least two as fellows of chartered accountants (FCAs) for metro cities; at least one should be an FCA for a non-metro. Of the partners, at least one should have an association of at least 10 years with the firm and at least another partner should have an association of at least five years.

Also, audit firms should have at least 10 subordinate members of staff for metro cities and five for non-metro cities.

The FMC has fixed the professional audit fee for undertaking audit of a national commodity exchange at Rs 1,00,000. For regional commodity exchanges and members of any exchange, the professional fee has been fixed at Rs 35,000, inclusive of all expenses. According to a recent deliberation at the high court here, the professional fee for conducting a forensic audit of a national commodity exchange was fixed at Rs 25,00,000.

“Fee is not the only criterion that determines whether to undertake the audit of a firm or not. Many reputed firms undertake audit of national/regional commodity exchanges or their members just for the sake of an investment,” said a senior official at a leading research firm.

Meanwhile, the FMC clarified the applicant firm would have to give a declaration that no partner/chartered accountant employee of the firm had been held found guilty of professional misconduct by the Institute of Chartered Accountant of India (ICAI). The FMC cautioned during the course of an inspection, an empanelled firm shouldn’t divulge any information to any person other than the authorised official of the commission or to a statutory authority, as decided by it.