Constitution of Audit Committee and relevant Provisions under the Companies Act 2013

Section 177 of Companies Act, 2013 lays down the provision the composition and the functions of the committee of audit Committee. The Audit Committee plays critical role in assessment of the Companies’ Financial Information and makes sure that the information is accurate and complete. Further, this section has also made whistle-blowing policy mandatory in India. The Audit Committee is one of the main pillars of the corporate governance system in public companies.

The main objective of an Audit Committee is to improve the integrity in the Financial Statements. It is also responsible for monitoring the internal control process and risk management systems. Charged with the responsibility to oversight of financial reporting and disclosure, the Audit Committee aims to enhance the confidence in the integrity of the company’s financial reports and announcements, the internal control processes and procedures and the risk management systems. 


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TDS on Commission or Brokerage

The word commission has several meanings, but in general terms commission means a fee that a person or business receives or pays out when a business transaction is completed. Commission income is an amount earned in exchange for transacting a sale of a product or providing a service. Commission income is usually a percentage of sale proceeds, but it could also be a flat rate depending on the sales commission agreement between the owner of a product and the seller of that product.

A brokerage is a fee charged by a broker to execute transactions or provide specialized services. Brokers charge brokerage fees for services such as purchases, sales, consultations, negotiations, and delivery. There are many types of brokerage fees charged in various industries such as financial services, insurance, real estate, and delivery services. Brokerage fees, also known as broker fees, are based on a percentage of the transaction, as a flat fee, or a hybrid of the two. Brokerage fees vary according to the industry and type of broker.In this article we will cover TDS sections applicable to payment of ‘commission or brokerage’. 


Process and Importance of Stock Audit for Manufacturing

An inventory audit or Stock Audit can be as simple as just taking a physical count of stock and inventory to verify a match to the accounting records. Auditing inventory is an important aspect of gathering evidence, especially for manufacturing or retail-based businesses. It can represent a large balance of assets or capital. During the Stock Audit Procedure the independent auditor observes the inventory and gives an opinion on whether the financial records of inventory accurately represent the physical inventory being carried. 


TDS on insurance

TDS on Insurance Commission [Section 194D]:

  • As per provisions of section 194D, the person who is responsible for making payment to a resident person on account of commission, remuneration, reward or otherwise for below mentioned purpose :
    • For issuance, renewal, continuance, or revival of an insurance policy; or
    • For Soliciting / Procuring Insurance Policies.
  • Thus, provisions of section 194D applies only to the payment made to a resident person. Payment made to a non-resident person is not covered under section 194D, the same is governed by section 195.


TDS under Section 194Lvarious sections

TDS on Payment of Compensation on Acquisition of Certain Immovable Property [Section 194LA]:

Nature of Income:

TDS under this section should be deducted on payment of a sum, being consideration/ compensation or enhanced consideration / compensation, on compulsory acquisition of any immovable property (other than agriculture land).

Liability to Deduct TDS: Any Person.

Rate of TDS:

  • TDS shall be deducted at the rate of 10% of the aforesaid payments.


Statutory Requirements and Importance of Internal Audit

As per the standard laid down by The Institute of Chartered Accountants of India (ICAI), Internal Audit is broadly defined as a Risk Management Function independently carried out to assist the Management of an organization. It is carried out internally at the behest of the Management and different from External or Statutory Audit.

An independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity's strategic risk management and internal control system- or in simple terms - It was, and is, a way of ensuring businesses and public sector organizations use resources efficiently and apply process consistently

Financial Management