IS THE INTERNAL AUDIT DEPARTMENT OF A FUND MANAGEMENT COMPANY REQUIRED TO BE UNDER THE OWNER OF THE COMPANY, RIGHT?

Is the internal audit department of a fund management company required to belong to the company owner? Can a person who has been sanctioned for administrative violations in the field of securities and stock market be appointed as a member of the internal audit department? Through today’s article, let’s learn more about this issue with Pham Consult!

Internal audit is regulated in Clause 1, Article 5 of Circular 99/2020/TT-BTC as follows:

Internal audit

1. A fund management company is a public company or a public fund manager, a public securities investment company must establish an internal audit department. The internal audit department belongs to the Board of Directors or Board of Members or company owners.

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Thus, according to the above regulations, the fund management company must establish an internal management department.

Accordingly, the Internal Audit Department belongs to the Board of Directors or Board of Members or the company owner.

Therefore, the internal audit department of the fund management company is not required to belong to the company owner according to the above regulations.

Pursuant to Clause 3, Article 5, Circular 99/2020/TT-BTC has the following regulations:

Internal audit

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3. Internal audit activities must ensure the following principles:

a) Independence: the internal audit department and its operations are independent of other departments and operations of the fund management company, and are not under the management of the fund management company’s Executive Board. Internal audit department employees are not allowed to concurrently work in other departments of the fund management company;

b) Objectivity: internal audit must be objective, fair, without prejudice, without influence, without interference when performing its tasks;

c) Honesty: internal audit work must be performed honestly, carefully and responsibly;

d) Coordination: the internal audit department has full, unrestricted access to the company’s information and documents. Members of the Executive Board and all employees of the fund management company are responsible for coordinating and providing fully, promptly, honestly and accurately all relevant information and documents, as required by the Ministry. internal audit department. Departments within the company are responsible for notifying the internal audit department when detecting weaknesses, shortcomings, violations, risks or major losses of the company’s or customers’ assets;

d) Confidentiality: the internal audit department and internal audit department staff are responsible for protecting the confidentiality of information obtained during the audit process, except when providing information at the request of the agency. competent state management.

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Accordingly, the internal audit activities of the fund management company must comply with the following principles:

– Independence

– Objective

– Honest

– Coordination

– Security

In particular, in terms of independence, the internal audit department and its operations are independent of other departments and operations of the fund management company, and are not under the management of the company’s Board of Directors. Fund management. Internal audit department employees are not allowed to concurrently work in other departments of the fund management company.

Pursuant to Clause 4, Article 5, Circular 99/2020/TT-BTC has the following regulations:

Internal audit

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4. When appointed, internal audit department personnel must ensure:

a) Not in the case of being prosecuted for criminal liability or serving a prison sentence or banned from practicing securities according to the provisions of law;

b) Have not been sanctioned for administrative violations in the field of securities and stock market within the latest 06 months up to the time of appointment;

c) Have a certificate to practice asset management in countries that are members of the Organization for Economic Cooperation and Development (OECD) or have passed the international certificate of CFA investment analysis at level II or higher. (Chartered Financial Analyst level II) or CIIA (Certified International Investment Analyst – Final Level); or have a securities practice certificate; or have a certificate of Basic issues of securities and stock market and a certificate of Law on securities and stock market.

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Accordingly, when appointed, internal audit department personnel must ensure the above requirements. In particular, there is a requirement that audit department personnel must not be sanctioned for administrative violations in the field of securities and stock market within the latest 6 months up to the time of appointment.

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