Audit committee

	Article-76
Section 292A of the Companies Act, 1956 insists public Companies having paid up capital having rupees five crore or more to form a committee of Board called “Audit Committee”.
Audit committee should consists of :
·         Minimum three directors; ·         At least two third shall be non-executive directors; ·         Committee can select its own Chairman; ·         Director-in- charge of finance can be an invitee to the committee (he cannot be a member); ·         Composition of the committee shall be disclosed in the Annual Report of the Company(Section 292A(4); ·         Terms of reference of the committee will be in written(by the Board).
Statutory auditor, internal auditor, cost auditor and director in charge of finance shall attend and participate in the committee meetings, but shall not have the power to vote. The audit committee has full access to information contained in the records of the Company. It can take external professional advice also. ·         Recommendations of this committee are binding the Board. ·         If Board does not accept recommendations, sufficient reasons should be recorded and communicated to the members. ·         Chairman of this committee shall attend the Annual General Meeting to provide clarifications.
The Companies Act, 1956 limits the provisions of Audit committee in Section 292A. However, SEBI gave predominance to Audit committee. The concept Audit Committee has certain differences under provisions of Companies Act, 1956 and SEBI.
Audit Committee is expected to perform the following duties and functions.
·         Ensure effective financial control; ·         Review compliance with statutory provisions; ·         Review Company’s internal audit and controls; ·         Review findings and report of internal as well as external auditors; ·         Ensure prompt payments to creditors, depositors, debenture holders and share holders; ·         Review default in payments and look into the reasons; ·         Examine related party transactions; ·         Financial reporting procedure and disclosure of financial information; ·         Review Companies financial and risk management policies; ·         Review significant findings of internal audit; ·         Review performance of internal as well as external auditors. ·         Compliance with accounting standards, Stock exchange and SEBI guide lines. ·         Review periodical financial statements before submission to Board; ·         Make recommendations to Board on appointment of auditors and their fee; ·         Recommending appointment and removal of auditors, fixing their fees and other services.
SEBI and AUDIT COMMITTEE to be continued…