A companys annual report contains not only the financial statements and notes thereon, but also certain

financial report as well. The most common and statutorily required reports are: [1] Auditors report [2] Directors report [3] Corporate Governance report

Corporate annual reports also contain certain financial reports. Auditors report plays an important role in ensuring financial discipline in a company. Directors report is the is the annual score card of the performance of the company, to its owner.

Requirements of the companies act Companies order, 2003 or CARO [1] applicability [2] matters to be included in the auditors report - fixed assets - inventory - loans granted to/taken from companies and firms in which directors are firms in which directors are interested

- internal control system - transactions with companies and firms in which directors are interested - public deposits - internal audit system - cost accounts and records - statutory dues - accumulated loses - default in repayment in loans - loans granted against securities - chit fund, mutual benefit fund/societies - companies dealing in securities

- third party guarantees - application of loan for the intended purpose - use of short term funds for long term investment - preferential allotment - creation of charge on debentures - end use of public issue - frauds Reason to be stated for unfavourable or qualified answers Significance and implications of auditors report

Reasons to be stated for unfavourable or qualified answers. Significance and implications of auditors report Corporate financial practices Analysis of the auditors report

Requirements of the companies act Corporate financial practices Analysis of directors report

INTRODUCTION:
The fundamental objective of corporate governance is investor protection & enhancement of shareholder's wealth, keeping in view the interests of other stakeholders. Corporate governance report seeks to report the effectiveness with which the mgt is discharging its responsibilities towards attaining its objectives.

In 1996, the confederation of Indian industry[CII] took a special initiative on corporate governance- the first institutional initiative in the Indian industry on the subject. A national task force was set up with Rahul Bajaj, chairman & managing director, Bajaj Auto Ltd, as its chairman. The objective was to develop & promote a code for corporate governance to be adopted & followed by Indian companies.

Kumar Mangalam Birla committee on corporate governance Scope & importance of corporate governance. Fundamental objective

SEBI considered the recommendations of the Kumar Mangalam Birla Committee & directed stock exchanges on 21st February,2000 to incorporate a new clause on corporate governance, namely clause49, in the listing agreement. The clause was amended a number of times & was applicable upto 31st december,2005.

Clause 49: corporate governance: The company agrees to comply with the following provisions: Board of directors 1.composition of board 2.non executive directors compensation & disclosures 3.other provisions as to board & committees 4.code of conduct

Audit committee 1.qualified & independent audit committee 2.meeting of audit committee 3.powers of audit committee 4.role of audit committee 5.review of information by audit committee Subsidiary companies Disclosures 1.basis of related party transactions 2.disclosures of accounting treatment 3.board disclosures-risk mgt 4.proceeds from public issues, right issues, preferential issues etc.

5.remunaration of directors 6.mgt 7.shareholders CEO/CFO certification Report on Corporate Governance Compliance

Listing agreement refers to audit committee set up pursuant to the provisions of the companies act, section 292A which deals with the Audit committee, was introduced in the Companies act by the companies act, 2000 with effect from 13th December 2000.