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

CA Nisha is the C&AG-appointed statutory auditor of Deccan Rail Infra Ltd., a Government company. For the current year, the Companies Act requires her to report on certain matters in addition to the normal opinion. Which matter is specifically required to be covered in the audit report of a Government company auditor under section 143(5), as a direction-based reporting?

The auditor of a Government company must report on the action taken on the directions issued by the C&AG, along with the impact of such directions on the accounts and financial statements, if any. This is the specific additional reporting required under section 143(5) of the Companies Act.

  1. AThe auditor reports on the action taken on the directions issued by the C&AG, including its financial impact, if anyCorrect
  2. BThe auditor must report on the personal net worth of the directors
  3. CThe auditor must certify the company's compliance with the Foreign Trade Policy
  4. DThe auditor must give an opinion on the quality of the products manufactured

Explanation

Under section 143(5), the C&AG gives directions to the appointed auditor on the manner of audit, and the auditor reports on action taken and the financial impact on the accounts and financial statements, if any. The other options are not part of such reporting and are outside the auditor's remit.

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