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

CA Meera is the statutory auditor of Rajdhani Power Corporation Ltd., a Government company, appointed by the C&AG. While planning the audit she wants to know how the C&AG's role interacts with her own. Which statement correctly describes the position under the Companies Act, 2013?

The C&AG can give directions to the auditor of a Government company on how the audit should be conducted, and the auditor must follow them and report the action taken. The auditor also sends a copy of the report to the C&AG, who may order a supplementary or test audit.

  1. AThe C&AG may give directions to her on the manner in which the company's accounts are to be audited, and she must act on them and report on the action takenCorrect
  2. BThe C&AG has no power to give directions; only the Board can instruct her on audit methodology
  3. CShe need not send a copy of her audit report to the C&AG, as the report goes only to members
  4. DThe C&AG's supplementary audit can only be conducted after the AGM, so she cannot be directed during the audit

Explanation

The C&AG can direct the appointed auditor on the manner of audit, and the auditor must comply and report the action taken on such directions. The auditor also submits a copy of the audit report to the C&AG. The C&AG may also conduct a supplementary audit or test audit, so the option denying any directions is wrong.

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