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CS Professional · Internal and Forensic Audit · Internal Controls

In Ganga Foods Ltd, a whistle-blower employee believes the head of finance is overriding internal controls to conceal payments. Which feature must the vigil mechanism under the Companies Act, 2013 provide in such a situation?

The vigil mechanism must give adequate safeguards against victimisation of those who use it and provide direct access to the Audit Committee chairperson in appropriate or exceptional cases. Reporting only through the implicated finance head would defeat this, as section 177(10) requires.

  1. AAdequate safeguards against victimisation and direct access to the Audit Committee chairperson in appropriate or exceptional casesCorrect
  2. BMandatory disclosure of the complainant's identity to the person complained against
  3. CReporting only to the head of finance, whose approval is needed to escalate
  4. DAccess to the Audit Committee chairperson only after the statutory auditor approves

Explanation

Section 177(10) requires the vigil mechanism to provide adequate safeguards against victimisation of users and direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. Routing only via the person alleged to be involved would defeat this requirement.

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