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CA Final · Advanced Auditing, Assurance and Professional Ethics · Internal Audit

Kaveri Foods Ltd, a listed public company, has an Audit Committee of three directors, of whom two are independent. The Chief Internal Auditor wants to raise a concern about a possible diversion of funds with the Audit Committee. Which statement is consistent with Section 177 of the Companies Act, 2013?

The Audit Committee may discuss the concern with the internal and statutory auditors and management. It also has authority to investigate, obtain professional advice from external sources and have full access to company records. No permission from the statutory auditor or the Board is needed.

  1. AThe Audit Committee may discuss related issues with the internal and statutory auditors and management, and may obtain external professional advice and have full access to company recordsCorrect
  2. BThe Audit Committee cannot discuss any matter with the internal auditor, as that is the Board's exclusive domain
  3. CThe Audit Committee may investigate only after obtaining prior permission from the statutory auditor
  4. DThe Audit Committee has no authority to obtain external professional advice and must rely on management's information

Explanation

Section 177(5) lets the Audit Committee discuss related issues with the internal and statutory auditors and management. Section 177(6) gives it authority to investigate matters in its terms of reference, obtain external professional advice and have full access to records. The other options invent restrictions that do not exist.

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