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

Bharat Heavy Fabricators Ltd. is a Government company in which the Central Government holds 76% of the paid-up capital. The Comptroller and Auditor General of India (C&AG) is to arrange the statutory audit for the current year. Who appoints the statutory auditor of this company under the Companies Act, 2013?

The Comptroller and Auditor General of India appoints the statutory auditor of a Government company. The appointment is made from a panel of Chartered Accountants, not by the members, the Board or the Central Government, because the Companies Act gives the C&AG this power for Government companies.

  1. AThe C&AG appoints the statutory auditorCorrect
  2. BThe Central Government appoints the auditor on the advice of the Ministry of Corporate Affairs
  3. CThe members at the annual general meeting appoint the auditor without any reference to the C&AG
  4. DThe Board of Directors appoints the auditor on the recommendation of the Audit Committee

Explanation

For a Government company, the statutory auditor is appointed by the C&AG, who selects from a panel of practising Chartered Accountants, and the appointment is within a year of the start of the financial year. The AGM or the Board cannot appoint the first or the subsequent auditor on their own. Appointment by the Central Government on MCA advice is not the statutory route.

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