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

CA Meera Rao is the statutory auditor of Kaveri Power Corporation Ltd, a Government company, appointed by the CAG. She has completed her audit and issued her report. Which of the following correctly describes the role of the CAG in relation to the audit that follows?

The CAG may conduct a supplementary or test audit and comment upon or supplement the statutory auditor's report. Those comments are laid before the annual general meeting along with the auditor's report. The CAG neither replaces the auditor's report nor dictates the opinion the auditor must give.

  1. AThe CAG may conduct a supplementary audit and comment upon or supplement the auditor's report, and such comments are placed before the AGM with the reportCorrect
  2. BThe CAG can replace the auditor's report with its own report, which is final and replaces the statutory auditor's opinion
  3. CThe CAG has no further role once the auditor is appointed, because only members can review the report
  4. DThe CAG may direct the auditor to change the opinion expressed, and the auditor must comply

Explanation

The CAG has the right to direct the manner of audit and to conduct a supplementary or test audit, and may comment upon or supplement the auditor's report. These comments are sent to the company and laid before the annual general meeting along with the auditor's report. The CAG cannot replace the opinion or dictate it, so the other options are wrong.

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