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CA Intermediate · Auditing and Ethics · Special Features of Audit of Different Type of Entities

CA Anita audits a Government company, Bharat Power Ltd., in which the Central Government holds 60% of paid-up capital. She was appointed by the Comptroller and Auditor-General of India (CAG). Which statement correctly describes the legal position on her appointment and the CAG's role?

In a Government company, the CAG appoints the statutory auditor, can give directions on how the audit is carried out, and can conduct a supplementary or test audit. The members' AGM appointment route applies to non-Government companies.

  1. AThe members appoint the auditor at the AGM, and the CAG has no role in the audit
  2. BThe Board appoints the auditor within 30 days of incorporation only, and the CAG has no further role
  3. CThe CAG appoints the statutory auditor and may also direct the manner in which accounts are audited and conduct a supplementary auditCorrect
  4. DThe Central Government appoints the auditor and the CAG may only receive a copy of the audit report

Explanation

For a Government company, the statutory auditor is appointed by the CAG. The CAG can direct the manner of audit and may conduct a supplementary or test audit of the accounts. The members' or the Board's appointment applies to other companies.

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