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CMA Intermediate · Business Laws and Ethics · Internal Financial Control for Financial Reporting

NFRA investigates CA firm Rao & Co. for professional misconduct and, after proving it, imposes a penalty. Which statement is correct under section 132 of the Companies Act, 2013?

For a firm, the penalty is not less than five lakh rupees and may extend to ten times the fees received. The one lakh rupee minimum and five times fees limit apply to individuals. Other bodies cannot continue proceedings once NFRA investigates, and appeals go to the Appellate Tribunal.

  1. AThe penalty on the firm is not less than five lakh rupees but may extend to ten times the fees receivedCorrect
  2. BThe penalty on the firm is not less than one lakh rupees but may extend to five times the fees received
  3. CThe ICAI may continue its own proceedings on the same misconduct in parallel
  4. DThe firm can appeal only to the Central Government

Explanation

Under section 132(4)(c)(A)(II) the penalty on firms is at least five lakh rupees and up to ten times the fees received. The one lakh and five times limits apply to individuals. The proviso to 132(4)(a) bars other bodies from continuing proceedings once NFRA investigates, and appeals lie to the Appellate Tribunal under section 132(5).

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