Skip to content

CS Executive · Company Law and Practice · Accounts and Auditors

In the current financial year, an application is made to re-open the books of Sagar Foods Ltd. relating to a period nine financial years before the current year. The Central Government has not issued any direction for keeping books for a longer period under the proviso to section 128(5). What is the position under section 130?

No order can be made. Section 130(3) bars re-opening of books relating to a period earlier than eight financial years immediately preceding the current financial year, and no Central Government direction for a longer retention period exists here, so the nine-year-old period is out of reach.

  1. AThe order may be made, as fraud has no time limit
  2. BThe order cannot be made, since no order can relate to a period earlier than eight financial years immediately preceding the current yearCorrect
  3. CThe order may be made only by the Central Government
  4. DThe order may be made if the Registrar certifies it

Explanation

Section 130(3) prohibits an order for re-opening books relating to a period earlier than eight financial years immediately preceding the current financial year. The exception applies only where the Central Government has directed a longer retention period, which is absent here. Nine years is beyond eight.

Did you get it right without looking?

One question tells you little. A timed set on Accounts and Auditors shows your real accuracy, how long you take and where you lose marks.

Practise Accounts and AuditorsFree diagnostic mock

More Accounts and Auditors questions