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CS Executive · Company Law and Practice · Accounts and Auditors

The auditor of Mehta Engineering Ltd, a private company, has reason to believe that its employees committed an offence involving fraud against the company, and the amount involved is lower than the specified amount. To whom does section 143(12) require the auditor to report?

For a fraud below the specified amount, the auditor reports to the audit committee constituted under section 177, or to the Board where there is no such committee. Reporting to the Central Government applies to larger frauds, under section 143(12) and its first proviso.

  1. AThe Central Government immediately in all cases
  2. BThe audit committee if constituted under section 177, or the Board in other casesCorrect
  3. CThe members at the next general meeting only
  4. DThe Registrar of Companies within thirty days

Explanation

The first proviso to section 143(12) says that where the fraud involves less than the specified amount, the auditor reports to the audit committee under section 177, or to the Board in other cases. Reporting to the Central Government applies to frauds at or above the specified amount. A private company with no audit committee reports to the Board.

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