CS Professional · Compliance Management, Audit and Due Diligence · Secretarial Audit
Himalaya Steel Ltd, a listed company, has a secretarial auditor who found a suspected fraud by an employee involving an amount lower than the specified threshold. The auditor reported it to the audit committee within the prescribed time. The company did not report it to the Central Government. What must the company do under section 143(12)?
The company must disclose the details of the fraud in the Board's report in the prescribed manner. The second proviso to section 143(12) requires this where a below-threshold fraud was reported to the audit committee or Board and not to the Central Government.
- ANothing, as reporting to the audit committee removes all further obligations
- BDisclose details of such frauds in the Board's report in the prescribed mannerCorrect
- CFile an application with the Tribunal to condone the non-reporting
- DRemove the secretarial auditor for reporting to the wrong authority
Explanation
The first proviso to section 143(12) allows reporting to the audit committee or the Board for fraud below the specified amount. The second proviso requires companies whose auditors reported such frauds to the committee or Board and not to the Central Government to disclose the details in the Board's report in the prescribed manner. So reporting to the committee alone does not end the company's obligation.
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