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: Is the principle of transparency flouted ?

Answer & Explanation:

Any document or report to be reviewed, noted or approved by the Board should be placed before it. Mere briefing by a person will not be sufficient. Each director has their own view point and may be able to perceive a reporting in a different manner. Further, any action on the part of the Committee is subject to supervision and direction of the Board. Board cannot escape its responsibility by delegating to Committee. Hence the Company should ensure that the document as such is placed before the Board. The principle of transparency will be definitely flouted if the requisite documents are not placed before the Board or if any board member is denied access to it.

Topics: Corporate Governance

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