Skip to content

CA Final · Advanced Auditing, Assurance and Professional Ethics · Internal Audit

During an internal audit of Zenith Infra Ltd., a listed company, an employee reports a genuine concern about financial misreporting through the company's vigil mechanism but fears victimisation by his department head. As per Section 177, which feature must the vigil mechanism contain?

The vigil mechanism must provide adequate safeguards against victimisation of those who use it and allow direct access to the Audit Committee chairperson in appropriate or exceptional cases. It covers both directors and employees, so reporting only to a department head would not satisfy Section 177.

  1. AReports may be made only to the department head
  2. BAdequate safeguards against victimisation and, in appropriate or exceptional cases, direct access to the chairperson of the Audit CommitteeCorrect
  3. CReports must be made directly to the statutory auditor
  4. DProtection applies only to directors and not to employees

Explanation

Section 177(9) requires a vigil mechanism for directors and employees to report genuine concerns. Section 177(10) requires adequate safeguards against victimisation and provision for direct access to the Audit Committee chairperson in appropriate or exceptional cases. The mechanism covers employees as well as directors.

Did you get it right without looking?

One question tells you little. A timed set on Internal Audit shows your real accuracy, how long you take and where you lose marks.

Practise Internal AuditFree diagnostic mock

More Internal Audit questions