CA Intermediate · Auditing and Ethics · Special Features of Audit of Different Type of Entities
CA Kabir audits Patel Infra Ltd, a government company, and was appointed by the Comptroller and Auditor General of India (CAG). The company's statutory auditor has completed the audit and issued the report. Which of the following correctly describes the further audit position under the Companies Act, 2013?
In a government company, the CAG appoints the auditor, can give directions on how the audit is conducted, receives a copy of the audit report, and may carry out a supplementary or test audit and comment on or supplement the report. This power does not depend on any modified opinion.
- AThe CAG may direct the statutory auditor on the manner of audit and the auditor must submit a copy of the audit report to the CAG, who may conduct a supplementary audit and comment upon or supplement the reportCorrect
- BThe CAG has no power over the audit of a government company once the auditor is appointed by him
- CThe statutory auditor must submit his report only to the members and the CAG can only comment on matters in the board's report
- DThe CAG can conduct a supplementary audit only if the statutory auditor gives a modified opinion
Explanation
For a government company, the CAG appoints the auditor and directs the manner of audit. The auditor reports to the CAG, who may order a test audit or supplementary audit, and whose comments are placed before the general meeting along with the audit report. The power is not limited to modified opinions and is not removed by appointment. Reporting is not confined to members.
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