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CA Final · Advanced Auditing, Assurance and Professional Ethics · Overview of Audit of Public Sector Undertakings

After the statutory auditor of a Government company, Shakti Rail Components Ltd, submits the audit report, the C&AG decides to conduct a supplementary audit. Which statement correctly describes the position?

The C&AG may conduct a supplementary or test audit after receiving the statutory auditor's report, and his comments are placed before the AGM along with that report. He does not need a Board request and does not replace the statutory auditor's report.

  1. AThe C&AG may conduct a test audit or supplementary audit, and the comments are placed before the Annual General Meeting along with the audit reportCorrect
  2. BSupplementary audit is possible only if the Board of Directors requests it
  3. CThe C&AG may replace the statutory auditor's report with his own comments
  4. DSupplementary audit is available only to the Central Government's own departments, not companies

Explanation

The C&AG has the right to conduct a supplementary or test audit of a Government company's accounts within 60 days of receiving the audit report. His comments or supplement are sent to the company and placed before the AGM along with the auditor's report. He supplements the statutory auditor's report rather than replacing it, and the Board's request is not required.

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