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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 whose entire share capital is held by the Central Government. Who has the power to appoint its statutory auditor for the first financial year and subsequent years under the Companies Act, 2013?

The Comptroller and Auditor General of India appoints the statutory auditor of a Government company. This differs from private companies, where shareholders appoint auditors. The C&AG selects the auditor, usually a chartered accountant firm, who then conducts the audit under the Companies Act.

  1. AThe shareholders at the first general meeting, on the Board's recommendation
  2. BThe Comptroller and Auditor General of India (C&AG)Correct
  3. CThe Central Government through the Ministry of Corporate Affairs
  4. DThe Audit Committee of the company

Explanation

For a Government company, the statutory auditor is appointed by the C&AG, who is the sole authority to appoint auditors, within 180 days of the commencement of the financial year. Appointment by shareholders applies to non-Government companies. The Ministry or the Audit Committee has no power to appoint the auditor of a Government company.

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