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CS Professional · Compliance Management, Audit and Due Diligence · Concepts of Various Audits

Sundaram Auto Components Ltd is covered by the Cost Audit Rules and its board wants to appoint a cost auditor for the year. Under the Companies Act, 2013, who appoints the cost auditor of such a company?

The Board of Directors appoints the cost auditor on the recommendation of the Audit Committee. Members later ratify only the remuneration. The appointment is not made by shareholders, the Central Government or the statutory auditor, so the Board route is correct.

  1. AThe Board of Directors, on the recommendation of the Audit CommitteeCorrect
  2. BThe shareholders in the annual general meeting, by ordinary resolution
  3. CThe Central Government, on the recommendation of the ICAI
  4. DThe statutory auditor of the company, by written nomination

Explanation

The Board appoints the cost auditor on the recommendation of the Audit Committee and fixes the remuneration, which is then ratified by members. The shareholders do not make the original appointment; they only ratify the remuneration. The Central Government and statutory auditor have no appointing role.

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