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CMA Final · Cost and Management Audit · Internal Control and Internal Audit

Which statement about the vigil mechanism under Section 177 of the Companies Act, 2013 is correct?

The vigil mechanism must safeguard users against victimisation and provide direct access to the Audit Committee chairperson in appropriate or exceptional cases. It covers both directors and employees, and its details must be disclosed on the company's website, if any, and in the Board's report.

  1. AIt must provide safeguards against victimisation and allow direct access to the Audit Committee chairperson in appropriate or exceptional casesCorrect
  2. BIt allows reporting only by directors and not by employees
  3. CIt is meant only for reporting to statutory auditors, bypassing the Audit Committee
  4. DIt need not be disclosed on the company's website or in the Board's report

Explanation

Section 177(9) and (10) require a vigil mechanism for directors and employees, with adequate safeguards against victimisation and direct access to the Audit Committee chairperson in appropriate or exceptional cases. Details must be disclosed on the website, if any, and in the Board's report.

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