Audit Committee
A board committee, composed mainly of independent directors, that oversees financial reporting, internal controls and the auditors.
How it is identified
Test: the committee has a majority of independent directors, an independent chair, and members with financial literacy
Unit
qualitative
In depth
The audit committee is where auditor concerns are supposed to reach the board without passing through management, which is the structural reason it must be independently composed. Its statutory remit in India includes reviewing financial statements, approving related party transactions, recommending auditor appointment and remuneration, and overseeing the whistle-blower mechanism. Its effectiveness depends entirely on whether it meets substantively, and the annual report discloses meeting frequency and attendance. A committee that meets four times a year for an hour is not overseeing anything, whatever its composition.
Worked example
An audit committee that met four times with one member absent from three meetings approved ₹240 crore of related party transactions during the year. The composition satisfied the rule; the oversight is what the attendance record describes.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Audit Committee” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.