Section 404 CAMA 2020
Section 404 Companies and Allied Matters Act is about Auditors’ report and audit committee. It is under Chapter 15 (Audit) of the Act.
(1) The auditors of a company shall make a report to its members on the accounts examined by them, and on every balance sheet and profit and loss account, and on all group financial statements, copies of which are to be laid before the company in a general meeting during the auditors’ tenure of office.
(2) The auditors’ report shall state the matters set out in the Fifth Schedule in addition to the report made under subsection (1), and the auditor shall in the case of a public company, make a report to an audit committee which shall be established by the public company.
(3) The audit committee referred to in subsection (2) shall consist of fivemembers comprising of three members and two non-executive directors, the members of the audit committee are not entitled to remuneration, and aresubject to election annually.
(4) The audit committee shall examine the auditors’ report and make recommendations thereon to the annual general meeting as it may deem fit.
(5) All members of the audit committee shall be financially literate, andat least one member shall be a member of a professional accounting body in Nigeria established by an Act of the National Assembly.
(6) Any member may nominate another member of the company to the audit committee by giving written notice of such nomination to the secretary of the company at least 21 days before the annual general meeting and any nomination not received prior to the meeting as stipulated is invalid.
(7) Subject to such other additional functions and powers that thecompany’s articles may stipulate, the objectives and functions of the audit committee are to—
(a) ascertain whether the accounting and reporting policies of the company are in accordance with legal requirements and agreed ethical practices ;
(b) review the scope and planning of audit requirements ;
(c) review the findings on management matters in conjunction with the external auditor and departmental responses thereon ;
(d) keep under review the effectiveness of the company’s system of accounting and internal control ;
(e) make recommendations to the board with regard to the appointment,removal and remuneration of the external auditors of the company ; and
(f ) authorise the internal auditor to carry out investigations into any activities of the company which may be of interest or concern to the committee.
