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Applicable on Listed Companies Checklist of Compliance of Code of Corporate Governance is to be finalized and annexed with final accounts
Executive Director Working or Whole time Director A working director of an organization who is usually also its full-time employee, and has a specified decision making role such as finance. Also called inside director or internal director Non-Executive Director A non-working director of a firm who is not an executive director and does not participate in the day-to-day management of the firm. But he is involved in planning & policy making. Expected to monitor & challenge the performance of the executive directors & the management; Expected to take a determined stand in the interests of the firm and its stakeholders. Also called external director, independent director or outside director. Independent Director Means a director who is not connected with the listed company or its promoters or directors on the basis of family relationship and who does not have any other relationship, whether pecuniary or otherwise, with the listed company, its associated companies, directors, executives or related parties. Any person nominated as a director under section 182 & 183 of the companies Ordinance (Directors Representing Special Interests) shall not be taken to be an independent director. Selected by such investor through a resolution of its Board of Directors and The policy with regard to selection of such person shall be disclosed in the Directors Report of the Investor Company.
Board of Directors
All listed companies shall encourage representation of o Non-Executive Directors o Minority Interest Holders, in the Board i.e., in Board of Directors Include at least one independent director representing institutional equity interest1. Executive Directors not more than 75% of the elected directors including the Chief Executive.2 Directors at the time of filing their consent to act shall give a declaration that they are aware of their duties and powers under o The Relevant law(s) o Companys Memorandum & Articles; and o The listing Regulations of Stock Exchanges in Pakistan.
Management Letter: Those reservations, issues need to be highlighted and addressed by Auditor.
Qualifications of CFO
Member of recognized body of Professional Accountants; or Graduate from a recognized university or equivalent, having at least five years relevant experience
Compliance with the Code of Corporate Governance All listed companies shall publish and circulate a statement along with their annual reports to set out the status of their compliance with the best practices of corporate governance as set out in Code of Corporate Governance Ensure Statement of Compliance with the best practices of corporate governance is review and certified by statutory auditors SECP can relax any of the best practices of corporate governance
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Authentication of Balance Sheet u/s. 241 The Balance Sheet and Profit and loss account shall be approved by the directors and shall be singed by the chief executive and at least one director. When the Chief Executive is for the time being not in Pakistan, then the Balance Sheet and Profit and loss account or income and expenditure account of the company shall be signed by not less than two Directors for the time being in Pakistan
Audit Committee
1. Composition a. Comprise not less than 3 members, including the Chairman b. Majority of members shall be from the non-executive directors and the chairman of the Audit Committee shall preferably be a non-executive director. c. Names of members of the Audit Committee shall be disclosed in each annual report of the listed company. 2. Frequency of Meetings a. Meet at least once every quarter of the financial year b. Held prior to the approval of interim results by Board of directors and before and after completion of external audit. c. Shall also be held, if requested by the external auditors or the head of internal audit. 3. Attendance at Meetings a. CFO, the head of internal audit & a representative of the external auditors shall attend meeting at which issues relating to accounts and audit are discussed. b. At least once a year, the Audit committee shall meet the external auditors without i. CFO and ii. Head of internal audit c. At least one a year, the Audit Committee shall meet the head of internal audit and other members of the internal audit function without i. CFO and ii. The External Auditors 4. Terms of Reference a. The Board of Directors shall determine the terms of reference of the Audit Committee. b. Committee shall be responsible for recommending to the Board the appointment of external auditors and shall consider any questions of resignation or removal of external auditors, audit fees and provisions by external auditors of any service to the company. c. The terms of reference shall also include i. Determination of appropriate measures to safeguard the listed companys asset ii. Review of preliminary announcements of results prior to publication iii. Review of quarterly, half-yearly and annual financial statement, prior to the approval by the Board of directors iv. Review of management letter issued by external auditors and managements response thereto v. Ensuring coordination between the internal and external auditors of the listed company vi. Facilitating the external audit vii. Review of the scope and extent of internal audit viii. Consideration of any other issue or matter as may be assigned by the Board of Directors. 5. Reporting Procedure a. Audit Committee shall appoint a Secretary of the Committee b. The Secretary shall circulate minutes of the meetings to all members, directors and the CFO within a fortnight. 6. Internal Audit a. There shall be an internal audit function in every listed company b. The Head of internal audit shall have access to the chair of the Audit Committee. c. All listed companies shall ensure that internal audit reports are provided for the review of external auditors.