AUDIT COMMITTEE: COMPLIANCE

Abstract

The role of Audit committee is pivotal in making quality auditing for proper functioning of good corporate governance system. The obligation of Audit Committee is to build a corporate environment that surrounds with the culture of transparency and honesty amongst auditors and management in the company. The ultimate purpose of audit committee is to oversee the audit process, financial reporting process, internal control system and compliance with regulatory laws. In this article, the author provides a brief overview of regulatory framework of audit committee and its compliance in corporate machinery.Before the enactment of Companies Act, 2013, Section 292A of CA 1956 provided that every Indian public company,having paid up capital of five crores rupees has to constitute an Audit Committee. In new act the mandate of audit committee is different from the previous act. Under Listing Agreement, clause 49 has the provision for the audit committee though it is applicable only to listed companies. So this article gives a brief introduction of mandatory provision for the constitution of Audit Committee and compliance and penal consequences for non-compliance.