Section 177 – Audit Committee

 

Section 177 – Audit Committee

Key Points:

• Public companies, listed companies, and certain other companies are required to have an Audit Committee.

• The Audit Committee must include non-executive directors, with a majority being independent.

Compliance Steps:

• Appoint a Chairperson for the Audit Committee (must be an independent director).

• The Audit Committee should review:

  • Financial Statements: Ensure the accuracy and integrity of financial reporting.

  • Internal Control Systems: Review systems for risk management and internal control processes.

  • Auditor Independence: Ensure that auditors are not involved in any conflict of interest.

Example:

• HDFC Ltd. ensures an independent audit committee comprising non-executive and independent directors. The committee reviews the quarterly financial reports and ensures that internal controls are in place to avoid fraud.