The Audit Committee is committee of Board of Directors charged with oversight of financial reporting and disclosure and provides an ‘independent’ reassurance to the Board through its oversight and monitoring role. It assists the Board to keep a close vigil on the working of the Company.
The Audit Committee is granted the authority to investigate any activity of the company and its subsidiaries and all employees shall be directed to cooperate with the Committee.
The Committee is also granted the authority to obtain legal or other independent professional advice and assistance if necessary. The Committee will have the authority to retain the professionals with special competence or skills as necessary to assist the Chairman in fulfilling its responsibilities.
The audit committee shall have minimum three directors as members. Two-thirds of the members of audit committee shall be independent directors.
All members of audit committee shall be financially literate and at least one member shall have accounting or related financial management expertise.
The members of the Audit Committee shall elect a Chairman from amongst themselves, who shall necessarily be an independent director.
The Chairman of the Audit Committee shall be present at Annual General Meeting to answer shareholder queries.
The audit committee may invite such of the executives, as it considers appropriate (and particularly the head of the finance function) to be present at the meetings of the committee, but on occasions it may also meet without the presence of any executives of the company. The finance director, head of internal audit and a representative of the statutory auditor may be present as invitees for the meetings of the audit committee;
The Company Secretary shall act as the secretary to the committee.
Frequency and Attendance
Meetings shall be held at let twice a year. Notice of meetings shall be circulated to the members one week in advance.
The Head of Finance, a representative of the External Auditor and internal Auditor may attend meetings by invitation. Other Board members shall have the right of attendance.
Questions arising at any meeting shall be decided by a majority of votes, each member having one vote and in the event of tie, the Chairman shall have a second or casting vote. However, at meetings where two members form a quorum, or when only two members are competent to vote on an issue, the Chairman will not have a casting vote.
The External Auditors may request a meeting if they consider it necessary. Upon the request of the Auditor, the Chairman of the Audit Committee shall convene a meeting of the Committee to consider any matters the Auditor believes should be brought to the attention of the Directors or shareholders.
Scope and Functions
The scope and functions of the Audit Committee shall be to:
The Audit Committee shall periodically update the Board.
The Annual Report of the Company shall disclose the composition of the Audit Committee, brief description of the scope and functions of the Audit Committee, name of members, Chairperson, meetings and attendance.
The recommendations 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 therefore and communicate such reasons to the shareholders.