Skip to content

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

CA Rohit, appointed by the C&AG as statutory auditor of Kaveri Mining Corporation Ltd, a Government company, finds that the C&AG has issued directions on the method of conducting the audit. Which action is correct for Rohit?

The auditor must comply with the C&AG's directions and report on the action taken on them and their impact on the accounts and financial statements. Independence does not allow ignoring them, and the Audit Committee cannot decide whether to follow them.

  1. AIgnore the directions because auditor independence prevails over any directions of the C&AG
  2. BComply with the directions and report on the action taken thereon and its impact on the accounts and financial statementsCorrect
  3. CSeek approval from the Audit Committee before deciding whether to follow the directions
  4. DFollow the directions but report on them only to the C&AG and not in the audit report

Explanation

For a Government company the auditor must comply with the directions given by the C&AG on how audit is to be conducted. The auditor must also report on the action taken on those directions and its impact on accounts and financial statements. The Audit Committee has no power to approve whether directions are followed. Reporting only to the C&AG omits the report requirement.

Did you get it right without looking?

One question tells you little. A timed set on Overview of Audit of Public Sector Undertakings shows your real accuracy, how long you take and where you lose marks.

Practise Overview of Audit of Public Sector UndertakingsFree diagnostic mock

More Overview of Audit of Public Sector Undertakings questions