CA Final · Advanced Auditing, Assurance and Professional Ethics · Internal Audit
Sharma & Co., Chartered Accountants, are the statutory auditors of Veda Pharma Ltd. The CFO requests the firm to also take over the company's internal audit function for the year, offering a separate fee. The Board is willing to approve it. What is the correct position under the Companies Act, 2013?
The firm cannot accept the assignment. Section 144 prohibits the appointed statutory auditor from providing internal audit services to the company, whether directly or indirectly, including through its partners. Board or Audit Committee approval applies only to permitted non-audit services, so it cannot cure this prohibited service.
- AThe firm may accept, as the Board has approved the service
- BThe firm may accept only if the Audit Committee also approves it
- CThe firm cannot accept, as internal audit is a service an appointed auditor must not render to the companyCorrect
- DThe firm may accept if the internal audit is done by a different partner of the firm
Explanation
Section 144 bars an auditor appointed under the Act from rendering internal audit, directly or indirectly, even if the Board or Audit Committee approves other services. Approval applies only to permitted services. Using another partner is still the firm rendering it, so that option is wrong.
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