Arham Logistics Limited, a listed company, has duly constituted an Audit Committee. One of the matters considered by the Audit Committee, was quarterly internal audit report. Board was informed by Chairman of the Audit C

CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · June 2022
Arham Logistics Limited, a listed company, has duly constituted an Audit Committee. One of the matters considered by the Audit Committee, was quarterly internal audit report. Board was informed by Chairman of the Audit Committee that there was no adverse remark reported in the internal audit report. An independent Director requested a copy of internal audit report, which was denied by CFO stating that it is only the prerogative of Audit Committee to consider internal audit report and hence copy of the same need not be placed in the Board meeting or circulated. Based on the above facts, answer the following questions: What is the role of Chairman of the Audit Committee ?

Answer & Explanation:

The Chairman of the Audit Committee has an important role to play. As per the provisions of the SEBI (LODR) Regulations, 2015, the Chairman of the Audit Committee shall be an Independent Director. The Chairman of the Audit Committee is a member of the Board himself. In the given situation, the Chairman of the Audit Committee should ensure that he is correctly educating the CFO about the role and responsibilities of the Audit Committee and the position of the Committee vis-a-vis the Board of Directors and the members of the Board. He can then immediately apprise the Chairman of the Board of Directors regarding the situation and so that necessary remedial measures can be taken before the matter aggravates.

Topics: Corporate Governance

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