Corporate Governance is a process of system to ensure that the company is managed in the best interest of all. The Audit Committee of the Board is today seen as a key fulcrum of any company. Being mandatory under Clause 49, the Audit Committee can be of great help to Board in implementing, monitoring and continuing good corporate governance practices to the benefit of the company and its stakeholders. This article offers an overview of the Audit Committee and its functions. The audit committee has an important role to play in the process since audit committee is a subgroup of the full board and monitors this process. It acts as a catalyst for effective financial reporting certainly. It is not the role of the audit committee to prepare financial statements or engage in the decisions relating to the preparation of those statements. The committee's job is clearly one of oversight and monitoring and in calling out this job it relies on senior financial management and the outside auditors. This study examines objective of audit committee in the company, its role, provisions of audit committees and its formation, functions of audit committee under Section 292A & Clause 49.