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December 2024

Audit Committee: Role and Responsibilities

By Dr Anup P. Shah, Chartered Accountant
Reading Time 21 mins

I. INTRODUCTION

The Board of Directors of a company carries out various roles and responsibilities in relation to a company. Many of these responsibilities are through various Board Committees. Of all the Committees of the Board, the Audit Committee is probably the most vital and is entrusted with the maximum tasks and duties. While an Audit Committee is mandatory for a listed company under the provisions of the Companies Act, 2013 (“the Act”) / the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”), it is also mandatory for certain public limited companies under the provisions of the Act. Let us examine the salient facets of this very important Board Committee. Interestingly, neither the Act nor the LODR defines the meaning of the term Audit Committee. The Corporate Governance Institute defines it as

“An audit committee is a committee of a company‘s board of directors that is responsible for overseeing the financial reporting process, internal controls, and audit activities.”

Let us examine the key duties and powers of the Audit Committee.

II. REQUIREMENTS

2.1 Companies Act, 2013

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