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Audit Committee.....?

हरिमोहन नागर एच एम डी (3 Points)

04 April 2019

Which company will have to create an audit committee U/s 177 of the Company Act 2013....???

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BISWAJIT PRADHAN (243 Points)
Replied 04 April 2019

The Board of Directors of every listed company and such other class or

classes of companies, as may be prescribed, shall constitute an Audit Committee.

(2) The Audit Committee shall consist of a minimum of three directors with independent

directors forming a majority:

Provided that majority of members of Audit Committee including its Chairperson shall

be persons with ability to read and understand, the financial statement.

(3) Every Audit Committee of a company existing immediately before the commencement

of this Act shall, within one year of such commencement, be reconstituted in accordance

with sub-section (2).

(4) Every Audit Committee shall act in accordance with the terms of reference specified

in writing by the Board which shall, inter alia, include,—

(i) the recommendation for appointment, remuneration and terms of appointment

of auditors of the company;

(ii) review and monitor the auditor’s independence and performance, and

effectiveness of audit process;

(iii) examination of the financial statement and the auditors’ report thereon;

(iv) approval or any subsequent modification of transactions of the company

with related parties;

(v) scrutiny of inter-corporate loans and investments;

(vi) valuation of undertakings or assets of the company, wherever it is necessary;

(vii) evaluation of internal financial controls and risk management systems;

(viii) monitoring the end use of funds raised through public offers and related

matters.

(5) The Audit Committee may call for the comments of the auditors about internal

control systems, the scope of audit, including the observations of the auditors and review of

financial statement before their submission to the Board and may also discuss any related

issues with the internal and statutory auditors and the management of the company.

(6) The Audit Committee shall have authority to investigate into any matter in relation

to the items specified in sub-section (4) or referred to it by the Board and for this purpose

shall have power to obtain professional advice from external sources and have full access to

information contained in the records of the company.

(7) The auditors of a company and the key managerial personnel shall have a right to

be heard in the meetings of the Audit Committee when it considers the auditor’s report but

shall not have the right to vote.

(8) The Board’s report under sub-section (3) of section 134 shall disclose the

composition of an Audit Committee and where the Board had not accepted any

recommendation of the Audit Committee, the same shall be disclosed in such report along

with the reasons therefor.

(9) Every listed company or such class or classes of companies, as may be prescribed,

shall establish a vigil mechanism for directors and employees to report genuine concerns in

such manner as may be prescribed.

(10) The vigil mechanism under sub-section (9) shall provide for adequate safeguards

against victimisation of persons who use such mechanism and make provision for direct

access to the chairperson of the Audit Committee in appropriate or exceptional cases:

Provided that the details of establishment of such mechanism shall be disclosed by the

company on its website, if any, and in

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