Skip to content

CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Legislative Framework of Corporate Governance in India

Kabir Steel Ltd's CFO claims that the board may choose any accounting standards it prefers so long as the auditor agrees. Applying Section 133, what is the correct position?

The CFO is wrong. Under Section 133, accounting standards are prescribed by the Central Government on the recommendation of the ICAI, in consultation with the NFRA. Neither the board nor the auditor can pick standards by agreement, and the section does not give SEBI this power.

  1. ACorrect, because auditors may prescribe standards
  2. BIncorrect, because standards are prescribed by the Central Government on the ICAI's recommendation, not chosen by the board or auditorCorrect
  3. CCorrect, because the NFRA allows each company to choose
  4. DIncorrect, because only SEBI may prescribe standards

Explanation

Section 133 vests the power to prescribe accounting standards in the Central Government, acting on the ICAI's recommendation after consultation with the NFRA. Neither the board nor the auditor has any power to prescribe or choose different standards, and SEBI is not named in this section.

Did you get it right without looking?

One question tells you little. A timed set on Legislative Framework of Corporate Governance in India shows your real accuracy, how long you take and where you lose marks.

Practise Legislative Framework of Corporate Governance in IndiaFree diagnostic mock

More Legislative Framework of Corporate Governance in India questions