CA Final · Advanced Auditing, Assurance and Professional Ethics · Internal Audit
Gramin Agro Producer Company, registered as a Producer Company, proposes to have its accounts internally audited by its finance manager, who is a commerce graduate but not a chartered accountant. Under the Companies Act, 2013, what is the correct conclusion?
The arrangement is not acceptable. Section 378ZF requires a Producer Company's internal audit to be done by a chartered accountant, while the articles only fix the interval and manner. A non-CA finance manager does not qualify, and the Board cannot widen the eligibility.
- AAcceptable, since the interval and manner are set in the articles and any qualified employee may perform the audit
- BAcceptable if the Board decides the finance manager is a suitable professional
- CNot acceptable, because a Producer Company must have its internal audit carried out by a chartered accountantCorrect
- DNot acceptable, because only a cost accountant may audit a Producer Company
Explanation
Section 378ZF requires every Producer Company to have an internal audit of its accounts carried out by a chartered accountant, at the interval and in the manner specified in its articles. The articles govern only timing and manner, not who may perform it. The Board's discretion to choose 'other professionals' is in section 138 for prescribed companies, not in this section.
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