As per the Section 164 of the Companies Act 2063, a listed company having paid up capital of Rs. 30 Million or more and the companies fully or partially owned by Nepal Government should constitute an audit committee with the chairmanship of a non-executive director and with minimum of 3 members.
Further, no person defined as close relative of the chief executive of the company is eligible to be a member of the committee. The committee should have at least one member having professional qualification in accounting with experience or having minimum of Bachelor Degree education in accounting, management, commerce, finance or in economics with experience in accounting and finance.
Main functions of an audit committee are:
Review of the financial statements of the company
Enforcement and the review of the company‟s financial management and control systems
Supervision and review of activities relating to internal auditing of the company
Formulating the policy regarding the short listing and appointment of auditors in line with legal requirement
Recommendation of possible names for the appointment of statutory auditor of the company with terms and conditions at the AGM
Supervision and review of the Auditor‟s compliance of professional ethics, relevant standards and legally binding directives
Determining the policy regarding the accounts of the company.
Ensuring the legal compliance as to detailed reports (e.g. Long Form Audit Report) to be included with the Audit Reports