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.
