Mutual Funds auditor-mf

Statutory auditor for mutual funds

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The statutory auditor for an Indian mutual fund AMC is an external CA firm appointed to audit the financial records of each scheme annually. The auditor verifies that scheme financial statements (NAV computation, holdings, income statements) accurately reflect operations and comply with Indian Accounting Standards and SEBI requirements.

Role and responsibilities

Annual audit

  • Verify scheme financial statements.
  • Confirm NAV computation accuracy.
  • Verify valuation methodologies applied correctly.
  • Check internal controls and operational compliance.
  • Issue audit certificate.

Audit scope

  • Each scheme audited annually.
  • Auditor reviews fund-accountant records.
  • Cross-checks with custodian and AMC books.
  • Verifies disclosures in annual report .

Distinct from compliance audit

The statutory auditor focuses on financial accuracy. The compliance auditor (a separate auditor) focuses on regulatory compliance.

SEBI requirements

Appointment

  • Statutory auditor appointed by the trustee company.
  • Approved by SEBI.
  • From SEBI-empanelled audit firms.

Rotation

  • SEBI requires audit-firm rotation periodically.
  • Same firm cannot audit indefinitely.
  • Promotes audit independence.

Reporting

  • Audit report published with annual report .
  • Material qualifications disclosed to investors.

Practical scope

For a typical AMC’s annual audit:

  • 50 to 100+ schemes audited.
  • Each scheme has independent audit certificate.
  • Group-level firm audit also conducted.
  • Auditor’s findings inform trustee report .

Notable industry events

  • IL&FS / DHFL / Yes Bank stress events tested auditor judgment.
  • Some schemes required mid-year audit interventions.
  • Subsequent SEBI tightening of auditor rotation and independence.

See also

External references

References

  1. SEBI (Mutual Funds) Regulations 1996.
  2. AMFI Best Practice Guidelines.

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