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CS Executive · Company Law and Practice · Accounts and Auditors

The auditor of Himalaya Steel Ltd, a Government company, has submitted a copy of the audit report to the Comptroller and Auditor-General of India (CAG). Which statement about the CAG's rights is correct under Section 143(6)?

Within sixty days of receiving the audit report, the CAG may conduct a supplementary audit and comment upon or supplement the report. No Board consent is needed, and the comments must be sent to members and placed before the annual general meeting with the audit report.

  1. AThe CAG may act within sixty days of receiving the report, and may conduct a supplementary audit and comment upon or supplement the audit reportCorrect
  2. BThe CAG may act within ninety days, but only to comment on the report, not to audit
  3. CThe CAG may conduct a supplementary audit only with the company's Board consent
  4. DThe CAG's comments are sent only to the Central Government and not to members

Explanation

Section 143(6) gives the CAG, within sixty days of receiving the report, the right to conduct a supplementary audit and to comment upon or supplement the audit report. The proviso requires the company to send those comments to every person entitled to the audited financial statements and to place them before the annual general meeting like the audit report. So the other options misstate the time, the power or the circulation.

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