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CMA Final · Cost and Management Audit · Internal Control and Internal Audit

Consider these statements on the vigil mechanism under Section 177 of the Companies Act, 2013. (i) The mechanism must provide adequate safeguards against victimisation of users. (ii) It must provide direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. (iii) Its establishment details must be disclosed on the company's website, if any, and in the Board's report. Which is correct?

All three statements are correct. The vigil mechanism must safeguard users against victimisation, allow direct access to the Audit Committee chairperson in appropriate or exceptional cases, and be disclosed on the company's website, if any, and in the Board's report, as Section 177(10) provides.

  1. AAll three statements are correctCorrect
  2. BOnly (i) and (ii) are correct
  3. COnly (ii) and (iii) are correct
  4. DOnly (i) and (iii) are correct

Explanation

Section 177(10) requires safeguards against victimisation and provision for direct access to the Audit Committee chairperson in appropriate or exceptional cases. Its proviso requires disclosure of the mechanism's details on the website, if any, and in the Board's report. Hence all three statements hold, and omitting any one is incorrect.

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