INTERNAL AUDIT OF CREDIT RATING AGENCY :

SEBI in consultation with the credit rating agencies (CRAs) prescribed that an internal audit on a half yearly  basis to be undertaken by the CRAs which is envisaged under Regulation 22 of the SEBI (Credit Rating Regulations), 1999 by Company Secretaries, Chartered Accountants, or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA. It shall cover 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 report shall state the methodology adopted, deficiencies observed, and consideration of response of the management on the deficiencies and also include a summary of operations and of the audit, covering the size of operations, number of transactions audited and the number of instances where violations/deviations were observed while making observations on the compliance of any regulatory requirement. The report shall comment on the adequacy of systems adopted by the CRA for compliance with the requirements of regulations and guidelines issued by SEBI and investor grievance redressal.

The time schedule for the internal audit shall be as under:

• The CRA shall receive the report of the internal audit within two months from the end of the half-year.

• The Board of Directors of the CRA shall consider the report and take steps to rectify the deficiencies,      if any, and the CRA shall send an Action Taken Report to SEBI within next two months.