(27)Explain the salient features of section 134 & section 143 of Companies Act, 2013

Answer:

Two  important Sections i.e. Section 134 and Section 143 of Companies Act, 2013 have direct impact on corporate governance structure of the organizations. Following are the some of salient features of them:

(i)Section 134:

• Directors’ Responsibility Statement shall state that ‘ the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
• the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
• the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

(ii)Section 143:

• Section 143(3) contains the auditor’s report which states:“whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls”; 
• “Adequacy and effectiveness of controls” refers to the adequacy of the control design and whether the control has been working effectively during the relevant financial year. The impact of this statement is that it involves continuous control monitoring during the year.