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Audit Committee Roles and Responsibilities; As required by Nepalese Companies Act

Audit Committee is a very important function in any entity, especially from the governance perspective. It is proven that audit committee lead to strengthened financial discipline in an entity improving accountability, systematic efficiency, and transparency.

Nepalese Company Act has made it mandatory for following companies to have an audit committee
  • companies with authorized capital above NPR 30 million, or
  • companies wholly or partially owned by Government of Nepal
Following is the extract of the provision from Nepalese Company Act, 2063 (First Amendment, 2074):
  • Must consist of at least three-member under the chairpersonship of the director not involved in the day to day management.
  • At least one member shall be an expert having a professional certificate on accounting or seasoned person with at least a bachelor's degree in accounts, commerce, management, finance or economics.
  • Member shall not be a close relative of the Chief Executive Officer.

Roles and Responsibilities of Audit Committee:


  • Review the truth and fairness of the accounts and financial statements.
  • Review internal control management system and risk management system.
  • Oversight internal audit function.
  • Recommend to AGM potential external auditor along with fees and TOR.
  • Oversee the audit carried out by external auditors to ensure compliance with acts, rules, regulation, and directives.
  • Formulate accounting policy and external audit hiring policy.
  • Ensure compliance with Long Form Audit Report and similar other requirements of the regulatory authority.
  • Other works assigned by the Annual General Assembly.
Other Provisions:
  • Chairperson of the Audit Committee must be present in the Annual General Meeting
  • Board of Directors Report must contain the progress status on the recommendation made by the Audit Committee.

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