Skip to main content

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.

Labels:

Comments

Post a Comment

Most Viewed

Nepalese VAT Act: Understanding VAT Claims for Food Expenses in Business

Introduction: Determining whether a business can claim VAT against food expenses depends on the nature and purpose of the expenditure. Let's walk through a checklist to find the answer: 1) Was it a Business Expense?      If yes, proceed to question 2. Otherwise, VAT cannot be claimed. 2) Was it for Entertainment Purposes?      If yes (e.g., staff retreat, gatherings, farewells), VAT cannot be claimed. Otherwise, it may be eligible. VAT Act and Regulations: Rule 41 of VAT Regulation specifies that certain services or goods are not eligible for input tax credit under Sec 17 of the Nepalese Income Tax Act. These include: 1) Beverages (excluding mineral water, as clarified in the directive) 2) Alcohol or alcohol-based beverages like whiskey and beer 3) Petrol for vehicles 4) Entertainment expenses In the case of food expenses, it's crucial to determine whether they fall under the category of entertainment expenses. This encompasses activities that provide perso...
Post a Comment
Read more

Windfall Gain Tax (आकस्मिक लाभमा कर) per Nepal Income Tax Act

Nepal's Income Tax Act defines Windfall gain as a gain obtained by means of lottery, gift, prize, tips, share of earning in a game (जितौरी)  or any other gain acquired incidentally.  Let us explain by example what can potentially be Windfall Gain.  1) Let's say apple recently launched a iPhone 14 in Nepal. Part of such launch, company offered its customer who buys iPhone, an iPad for free. The market value of the iPhone is Rs. 214,000 and that of iPad is Rs. 189,000. In such case, customer who received Rs. 189,000 worth of iPad without any additional cost will be considered a prize hence, a windfall gain. 2) Recently DRS gaming won US$ 292,000 (approx. Rs 4 crore) for being runner's up in the grand finals of the PUBG Mobile Global Championship. Let's assume here that DRS gaming has not been registered as a company but simply represented by individuals. If I am not mistaken, there are 4 members in the team. So, each individual will have won Rs. 1 crore as share of earni...
Post a Comment
Read more

Is Postage Stamp (Hulak Ticket) mandatory for company registration in Nepal?

Postage Stamp was a mandatory part of the application for registration of a company in Nepal. In fact, it is not only for the registration of the company but for most of the government applications, be it simple handwritten or special forms. Thumb rule is no postage stamp no registration. You must be wondering is it in addition to an application fee or registration fee levied by the government. And, the answer is yes. This is on top of the regular service fee charged.  One can find the postage stamp easily in the nearby shops or cafeteria where such government offices are situated. However, with the Companies Act, 2063, and its directives issued in 2072, the provision of furnishing postage stamp along with application has been repealed. What does it mean? One is no longer required to buy a postage stamp and place it on top of the application or form for registration of the company. Photo credit: Google Image Let us talk about the Postage Stamp itself.  Do you know wh...
Post a Comment
Read more