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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 paid-up capital. Under the Companies Act, 2013, who appoints the statutory auditor of this company for a financial year?

The Comptroller and Auditor General of India appoints the statutory auditor of a Government company. Under the Companies Act, 2013, the CAG selects a chartered accountant for each year, so neither the Board, the shareholders nor the Ministry concerned makes that appointment.

  1. AThe Comptroller and Auditor General of India (CAG), on its ownCorrect
  2. BThe Central Government, on the advice of the Ministry of Finance
  3. CThe Board of Directors, by resolution at a Board meeting in the first quarter
  4. DThe shareholders at the annual general meeting, from a panel prepared by the Audit Committee

Explanation

For a Government company, the statutory auditor is appointed by the CAG, who selects a chartered accountant (usually from a panel) for the year. The Board and members do not appoint, so options on Board or AGM appointment are wrong. The Central Government as shareholder has no power to appoint the auditor.

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