The requirement of Audit Committee as per sub section (1) of section (177) of the Companies Act, 2013 has been limited to
1. Every Listed Public Company.
2. The Following Class of Companies
Note: The paid up share capital, turnover, outstanding loans, debentures and deposits, as the case may be as existing on the date of last audited financial statements shall be taken into record.
Composition of committee
Minimum 3 directors with majority of people being Independent directors
Majority of the people should have the ability to read financial statements
Functions of the committee
1. Recommendation for appointment, remuneration and terms of appointment of auditors of the company.
2. review and monitor the auditor’s independence and performance, and effectiveness of audit process.
3. examination of the financial statement and the auditors’ report thereon.
4. approval or any subsequent modification of transactions of the company with related parties.
5. scrutiny of inter-corporate loans and investments.
6. valuation of undertakings or assets of the company, wherever it is necessary;
7. evaluation of internal financial controls and risk management systems;
8. monitoring the end use of funds raised through public offers and related matters.
the KMP shall also have a right to be heard in the meetings of the Audit Committee when it considers the auditor report, though they shall not have voting rights.
The Board’s report of the Company 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 for not accepting the recommendation.