1. Primary Objectives
The Audit Committee’s role shall flow directly from the Board of Directors’ (hereinafter referred as the “Board”) overview function on corporate governance; which holds the Management accountable to the Board and the Board, in turn, accountable to the shareholders. Acting as a catalyst in helping the organization achieve its objectives, the primary role of the Audit Committee is that of assisting the Board in overseeing the:-
– Accuracy, Integrity and transparency of the Company’s financial statements;
– Qualification and independence of the Statutory auditors;
– Performance of the Company’s Statutory auditors and the Internal Audit function; and
– Adequacy and reliability of the internal control system.
– Approval of transactions with related parties.
The role, responsibilities and powers of the Committee shall include the matter set out in this Charter and such other items as may be prescribed by applicable laws or by Board as amended from time to time.
2.1 The Audit Committee shall comprise of at least three directors as members of the Committee, out of which atleast two-third members shall be Independent Directors. (Independence would be decided upon by the Board and in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the “Listing Regulations”) and Companies Act, 2013 (hereinafter referred as the “Act”) and such other legal and regulatory environment that may be applicable to the Company.
2.2 All members of Audit Committee shall be ‘financially literate’ (which at minimum means possessing a working familiarity with the basic finance and accounting practices) and at least one member shall, member shall have accounting or related financial management expertise.
2.3 The Board shall designate one of the member of the Audit Committee as the Chairman of the Committee which shall be an Independent Director.
The Company Secretary shall act as the Secretary to the Committee Meetings.
The quorum necessary for transacting business at a meeting of the Committee shall be two members or one-third of the members of the Audit Committee; whichever isgreater with at least two Independent Directors. A duly convened meeting of the Committee at which the requisite quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.
5.1 The Committee shall meet at least 4 times in a year and not more than 120 days shall elapse between two successive meetings.
5.2 The audit committee at its discretion shall invite the finance director or head of the finance function and a representative of the statutory auditor and Internal Auditor and any other such executives to be present at the meetings of the committee.
6. Annual General Meeting
The Chairman of the Committee shall attend the Annual General Meeting to answer shareholder queries and provide any clarifications on matters relating to audit.
The Committee shall act and have powers in accordance with the terms of reference specified in writing, by the Board, which shall include the following:
7.1 To investigate any activity within the scope of this Charter or referred to it by the Board and for this purpose, shall have full access to information contained in the books of accounts and the Company’s facilities and personnel.
7.2 To seek information from and have direct access to any employee, key managerial personnel or director of the Company, to perform its duties effectively.
7.3 To secure assistance and attendance of outsiders with relevant knowledge/expertise in accounting, legal or other matters, if it considers necessary.
7.4 To engage independent counsel and other advisors as it deems appropriate to perform its duties and responsibilities.
7.5 To engage a registered valuer taking into consideration such qualification and experience as may be considered appropriate in case of valuations required in respect of any property, stocks, shares, debentures, securities, goodwill, assets, liabilities or net worth of a company.
7.6 To determine the provision of appropriate funding by the Company for compensation to the Statutory auditors, other advisors/experts that the Committee chooses to engage and other ordinary administrative expenses of the Committee.
The responsibilities of the Audit Committee shall include the following:
8.1 Financial Statements
8.1.1 Oversight of the Company’s financial reporting process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.
8.1.2 Discuss and review, with the management and auditors, the annual/half yearly/quarterly financial statements before submission to the Board, with particular reference to:
8.2 Statutory Audit
8.2.1 Hold timely discussions with Statutory Auditors regarding:-
8.2.2 Discuss with Statutory Auditors, before the audit commences, the nature and scope of audit as well as post-audit discussion / review to ascertain any area of concern.
8.2.3 Review with Statutory Auditor, any audit problems or difficulties and management’s response.
8.2.4 Resolve any disagreements of the Statutory Auditor with the management regarding financial reporting.
8.2.5 Recommend to the Board, the appointment, re-appointment, removal of the Statutory auditors, fixation of audit fee and also approval for payment for any other services rendered by the Statutory Auditors.
220.127.116.11 While considering such appointment, the Committee shall consider:
-whether the qualifications and experience of the auditors is commensurate with the size and requirements of the Company.
-any order or pending proceeding relating to professional matters of conduct against the proposed auditor before the Institute of Chartered Accountants of India or any competent authority or any Court.
The Committee may call for other information from the proposed Auditors as it may deem fit.
18.104.22.168 Recommend the name of an individual or a firm as auditor to the Board for consideration and further recommendation to the Shareholders. In case of disagreement by the Board citing reasons for disagreement, it shall either:
8.2.6 Review, with the Statutory auditors, certain information relating to the auditor’s judgments about the quality, not just the acceptability, of the Company’s accounting principles as applied to its financial reporting and the discussion would generally include –
8.2.9 Review and suitably reply to the report(s) forwarded by the auditors on the matters where the auditors have sufficient reasons to believe that an offence involving fraud, is being or has been committed against the company by officers or employees of the company. Such reply should be forwarded within prescribed period.
8.3 Internal Audit
8.3.1 Review on a regular basis the adequacy of internal audit function, approval of the audit plan and its execution, reporting structure, budget, coverage and frequency of internal audit.
8.3.2 Review the appointment, removal, performance and terms of remuneration of the Chief Internal Auditor.
8.3.3 Review the regular internal reports to management prepared by the internal audit department, as well as management’s response thereto.
8.3.4 Review the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
8.3.5 Discuss with internal auditors any significant findings and follow-up thereon.
8.3.6 Review Internal Audit Reports relating to the internal control weaknesses.
8.4 Internal Control
8.4.1 Review with the management, Statutory and internal auditors, the scope of internal audit, adequacy of internal control systems and ensure adherence thereto and any other related issues.
8.4.2 Review Management letters / letters of internal control weaknesses issued by statutory / internal auditors.
8.4.3 Review management’s report on internal control and Statutory auditor’s attestation/observations on management’s assertion.
8.4.4 Evaluation of Internal Financial Controls.
8.5 Whistleblowing/vigil mechanism:
The Committee shall review the Company’s arrangements for its directors and employees to raise concerns, in confidence, about possible wrongdoingin financial reporting, accounting, auditing or any other genuine concerns. The mechanism shall provide adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases. The Committee shall ensure that these arrangements allow independent investigation of such matters and appropriate follow up action. In case of any conflict of interest, the Committee Members would disassociate from such investigation.
8.6 Risk Management
8.6.1 Evaluate Risk Management System.
8.6.2 Discuss with the management, the Company’s policies with respect to risk assessment and risk management, including appropriate guidelines to govern the process, as well as the Company’s major financial risk exposures including policy for foreign exchange and derivative transactions and the steps management has undertaken to control them.
8.7 Related party transactions
8.7.1 Review and approve the statement of all related party transactions submitted by the management, including the material related party transactions as decided by the policy.
8.7.2 The committee may grant omnibus approval for related party transactions proposed to be entered into by the Company subject to the following conditions, namely-
22.214.171.124 The Audit Committee shall, after obtaining approval of the Board, specify the criteria for making the omnibus approval which shall include the following, namely:-
126.96.36.199 The Committee shall consider the following factors while specifying the criteria for making omnibus approval, namely: –
188.8.131.52 The omnibus approval shall contain or indicate the following: –
184.108.40.206 Where the need for related party transaction cannot be foreseen and aforesaid details are not available, the committee may make omnibus approval for such transactions subject to their value not exceeding rupees one crore per transaction.
8.8 Insider Trading
8.8.1 To review policies in relation to the implementation of the Code of Conduct for Prevention of Insider Trading.
8.8.2 To note and take on record the disclosures and report as submitted by the Compliance Officer on a quarterly basis.
8.8.3 To provide directions on any penal action to be initiated, in case of any violation of the SEBI (Prohibition of Insider Trading) Regulations, 2015 or the Code, by any person.
8.9 Subsidiary company oversight
Review the financial statements, in particular, the investments made by the unlisted subsidiary companies.
9.1 The Audit Committee will report and update the Board, periodically, on various matters that it has considered as well as on the independence of the Auditors.
9.2 The Annual Report of the Company shall disclose the composition of the Audit Committee, brief description of the scope of the Audit Committee Charter, names of members, Chairperson, meetings and attendance.
9.3 The recommendations of the Audit Committee on any matter relating to financial management including the audit report, shall be binding on the Board. If the Board does not accept the recommendations of the Audit Committee, it shall record the reasons thereof and communicate such reasons to the shareholders.
9.4 Reporting regularly to the Board with respect to:
10. Other Functions
10.1 Perform other activities related to this Charter as requested by the Board.
10.2 Carry out additional functions as is contained in the listing Regulation or other regulatory requirements applicable to the Company or in the terms of reference of the Audit Committee.
11. Review of Audit Committee Charter
The adequacy of this charter shall be reviewed and reassessed by the Audit Committee as may be deem fit by the Committee and appropriate recommendations shall be made to the Board to update the same based on the changes that may be brought about to the regulatory framework, from time to time.