1. Requirement of system audit for mutual funds was introduced vide SEBI Circular SEBI/IMD/CIR No.9/176988/2009 dated September 16, 2009.

2. Considering the importance of systems audit in technology-driven asset management activity and to enhance and standardize the systems audit, revised guidelines in this regard are placed at Annexure 1. These guidelines are indicative and not exhaustive in nature. On the date of issuance of this circular, SEBI Circular SEBI/IMD/CIR No.9/176988/2009 dated September 16, 2009 shall stand rescinded.

3. The aforementioned audit should be encompassing an audit of systems and processes, inter alia, related to examination of the integration of front office system with the back office system, fund accounting system for calculation of net asset values, financial accounting and reporting system for the AMC, Unit-holder administration and servicing systems for customer service, funds flow process, system processes for meeting regulatory requirements, prudential investment limits and access rights to systems interface.

4. Mutual Funds / AMCs are advised to conduct systems audit on an annual basis by an independent CISA / CISM qualified or equivalent auditor to check compliance of the provisions of this circular.