During the Meeting of Audit Committee of PQR Ltd. (BSE Listed Company), the member of the Audit Committee so desired to detailed information on material management control at depot. He also required the financial control

The Project Head's opinion that the Audit Committee has no such power is incorrect. The Audit Committee, being a crucial component of corporate governance, is vested with significant powers under both the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Powers of the Audit Committee Section 177 (5), (6) and (7) of the Companies Act, 2013 Regulation 18(2)(c) of the SEBI Listing Regulations, 2015 1. The Audit Committee has the power to call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company. [Section 177(5)] The Audit committee shall have powers to investigate any activity within its terms of reference, seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary. 2. Audit Committee shall have authority to investigate into any matter in relation to the items specified in terms of reference or referred to it by the Board and for this purpose the Committee has power to obtain professional advice from external sources. The Committee for this purpose shall have full access to information contained in the records of the company. [Section 177(6)] 3. The auditors of a company and the key managerial personnel shall have a right to be heard in the meetings of the Audit Committee when it considers the auditor's report but shall not have the right to vote. [Section 177(7)] Based on the above provisions, the Audit Committee of PQR Ltd. has the power to call for detailed information on material management control at the depot and the financial control system on material movement. These fall within its terms of reference to review internal control systems and investigate matters referred to it by the Board, with full access to company records. Penal Provisions for Non-Constitution of Audit Committee As per section 178(8) of the Companies Act, 2013, in case of any contravention of the provisions of section 177 of the Companies Act, 2013 (which includes the mandatory constitution of an Audit Committee for certain companies), the Company shall be liable to a penalty of ₹5 Lakhs and every officer of the Company who is in default shall be liable to a penalty of ₹1 Lakh.