Chapter 7
Audit Committee
Handbook of Corporate Governance
Audit Committee
95
7.1
Composition
SBP Directives
Prudential Regulation XXIX Sub-clause vii of clause 2
To share the load of activities, the Board may form specialized committees with
well-defined objectives, authorities and tenure. These committees, preferably
comprising of ‘Non-Executive’ board members, shall oversee areas like audit, risk
management, recruitment, compensation, credit, etc without indulging in day-to-
day operations in these areas. These committees should apprise the full board of
their activities and achievements on regular basis.
SECP’s Code
Para XXX
The Board of Directors of every listed company shall establish an Audit
Committee, which shall comprise not less than three members, including the
chairman. Majority of the members of the Committee shall be from among the
non-executive directors of the listed company and the chairman of the Audit
Committee shall preferably be a non-executive director. The names of members
of the Audit Committee shall be disclosed in each annual report of the listed
company.
7.2 Meetings
SECP’S CODE
Para XXXI
The Audit Committee of a listed company shall meet at least once every quarter
of the financial year. These meetings shall be held prior to the approval of interim
results of the listed company by its Board of Directors and before and after
completion of external audit. A meeting of the Audit Committee shall also be held,
if requested by the external auditors or the head of internal audit.
7.3
Terms of Reference
SECP’S CODE
Para XXXIII
The Board of Directors of every listed company shall determine the terms of
reference of the Audit Committee. The Audit Committee shall, among other
things, be responsible for recommending to the Board of Directors the
appointment of external auditors by the listed company’s shareholders and shall
consid