Skip to content

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

Mahalaxmi Farmers Producer Company Ltd., a Producer Company under the Companies Act, 2013, wants its accounts internally audited by a person who is a cost accountant but not a chartered accountant. What is the correct position?

The proposal is not permitted. Section 378ZF requires every Producer Company to have its accounts internally audited by a chartered accountant, at intervals and in the manner its articles specify. A cost accountant who is not a chartered accountant does not satisfy this requirement.

  1. APermitted, as any professional decided by the Board can do it
  2. BPermitted, as a cost accountant is equal to a chartered accountant for this purpose
  3. CNot permitted; Section 378ZF requires the internal audit of a Producer Company's accounts to be done by a chartered accountantCorrect
  4. DNot permitted, as Producer Companies need no internal audit

Explanation

Section 378ZF requires every Producer Company to have internal audit of its accounts done by a chartered accountant, at the interval and in the manner specified in its articles. The wider Section 138 choice of cost accountant or other professional does not apply to this specific requirement.

Did you get it right without looking?

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

Practise Internal AuditFree diagnostic mock

More Internal Audit questions