SEBI and audit committee

	Article-77
The regulator, SEBI’s code of Corporate Governance insists listed Companies to form an “Audit Committee”. It is a subcommittee of the Board. Auditors are not members of the Audit Committee, but they are invitees.
Audit Committee is a proposal of the committee (in 2000) on corporate governance appointed by SEBI under the chairmanship of Sri. Kumar Mangalam Birla. Confederation of Indian Industry (CII) also demanded the need for such committees. In fact, the concept “Audit Committee” was not a new one. In 1978, New York Stock Exchange has asked all their listed Companies to have Audit Committees.
Main role of audit committee is strengthening the audit process in a Company. It is supposed to help to maintain good corporate governance and thereby increase the credibility, acceptability and reliability of a Company.
Important points regarding Audit Committee: ·         Audit Committee is a subcommittee of the Board. So only, Board member can be a member of Audit Committee. ·         Audit Committee should consist of independent directors. ·         This committee should consist of non-executive directors. ·         It should consist of at least three non-executive directors out of which two should be independent. ·         At least one member should have financial and accounting background. ·         Chairman of the committee shall be an independent Director. ·         Chairman will be present in Annual General Meeting to answer queries. ·         The Audit Committee has no management responsibility. ·         The Audit Committee should report to the Board. ·         C&AG is stressing the need for Audit Committee in Government Companies. ·         Audit Committee should assist Board in matters relating to corporate accounting and reporting policies. ·         Audit Committee should periodically interact with auditors both internal and external. ·         Members of Audit Committee must have full access to financial data of Company, its subsidiaries and associates. ·         Al least three meeting in a year is essential.
Powers
·         To investigate any activity of the Company. ·         To seek information from any employee. ·         To obtain legal and professional advice. ·         To secure the attendance of experienced hands.
Follows: Audit Committee: SEBI and Companies Act, 1956.