Professional Documents
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Auditors & Board of Directors
Auditors & Board of Directors
Auditors & Board of Directors
By
Vrushali Palodkar(31)
Date: 17-04-2010
Contents
• Meaning board of director
• Function of Board of director
• Types of board of director
• Board procedure
• Meaning of audit & auditor
• Types of auditor
• Duties of auditor
• Responsibilities of auditor
• Provisions contained in SOX Act regarding auditors are
• Indian Situation
• Audit committee
• References
The Board of director of a company which
includes all directors elected by shareholders to
represent their interest is vested with the
power of management .
The board has extensive powers to manage a
company delegate its power and authority to
executive and carry on all activities to promote
the interest of the company and its
shareholders, subject to certain restriction
imposed by public authorities.
Directs the Company by formulating and
reviewing the Company’s policies.
Controls the Company and its management by
laying down the code of conduct.
Is accountable to the shareholders for creating,
protecting and enhancing wealth and resources
of the Company d.
The boar of directors should ensure that the
senior management implements policies that
prohibit activities &relationships which
thereby diminish the quality of corporate
governance.
Board of Directors
Types of Directors
Executive director – an executive of the
company and also a member of the board
Non-Executive director – no employment
relationship
Independent non-executive directors – free
from any business or other relationship which
may interfere with the exercise of independent
judgment
Affiliated director – who has some kind of
independence, yet may have links with
suppliers, customers, etc.
Receive director’s remuneration
Do not have any other material pecuniary
relationship or transactions with the Company,
its promoters, its management etc.,
Emphasis on the caliber of the non executive
directors.
Institutions should appoint nominees on the
board of companies only on a selective basis
where such appointment is considered
necessary to protect the interest of the
Institution.
The role of the Chairman is to ensure that the
board meetings are conducted in an effective
manner.
The Chairman’s role should in principle be
different from that of the Chief Executive.
The Board meetings should be held at least 4
times in a year with a maximum time gap of 4
months between any two meetings.
A director should not be a member in more
than 10 committees or act as a Chairman of
more than 5 committees across all companies in
which he is a director.
Every director must inform the Company
about the committee positions he occupies in
other companies and notify changes as and
when they take place.
An auditor is defined as person appointed by
company to perform an audit . An auditor is a
representative of share holder , forming link
between government agencies , stock holders ,
investor and creditors.
Internal auditors: Internal auditors are
employed by the organisation for which they
perform audits.Their responsibilities vary and may
include financial statement audits,compliance
audits and operational audits
Independent auditors: The opinion of
independent auditor are about financial statement
makes the statement more credible to such user as
investors ,bankers, labour unions,government
agencies and the general public.
Government auditors: Government auditors
work in local,state and federal or government
agencies performing financial,compliance and
operational audits.
The Duties of an auditor are defined under section 227(1A)of
the companies act 1956.It says that an auditor can enquire