CMA Intermediate · Corporate Accounting and Auditing · Auditing of Different Types of Undertakings
In relation to a Government company, which of the following correctly describes the C&AG's power regarding the audit conducted by the company's statutory auditor?
The C&AG can direct the statutory auditor on the manner of auditing a Government company and can carry out a supplementary audit, commenting on or supplementing the auditor's report. The comments are laid before the annual general meeting along with the report.
- AC&AG may give directions to the auditor on the manner of conducting the audit and may conduct a supplementary auditCorrect
- BC&AG can only receive the audit report and has no right to comment on it
- CC&AG must approve the audit fees and can also set the audit materiality level for the statutory auditor
- DC&AG may replace the auditor at any time during the year without any reason or procedure
Explanation
The C&AG has the power to direct the statutory auditor on how the company's accounts are to be audited and to give directions. After receiving the auditor's report, C&AG may conduct a supplementary audit and comment upon or supplement the report. The option saying C&AG has no right to comment is wrong because comments are made, and these are placed before the general meeting.
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