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

Ganga Rail Equipment Ltd is a Government company. The C&AG-appointed auditor has issued the audit report. Subsequently the C&AG decides to conduct a supplementary audit. Which is the correct position?

The C&AG may direct a supplementary or test audit of a Government company by authorised persons and may comment on or supplement the statutory auditor's report. This power does not depend on any shareholder resolution or AGM approval.

  1. AThe C&AG can conduct a supplementary audit or test audit, and comment upon or supplement the statutory auditor's reportCorrect
  2. BThe C&AG can only ask the statutory auditor to reissue the report and cannot conduct any audit himself
  3. CThe supplementary audit is possible only if the shareholders pass a special resolution
  4. DThe supplementary audit can be done only after the company's AGM approves the financial statements

Explanation

Under the Companies Act, the C&AG has the power to conduct a supplementary or test audit of a Government company's accounts by persons authorised by him, and may comment upon or supplement the auditor's report. No shareholder resolution or AGM approval is needed, so the other options are incorrect.

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