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

The NFRA finds that a chartered accountant did not act properly in an audit that included reporting on internal financial controls. It decides to debar the member from undertaking audits. What does the Companies Act, 2013 provide on the period of debarment?

The NFRA may debar a member or firm for at least six months, or for a longer period determined by it that does not exceed ten years. There is a fixed lower and upper limit, and an appeal lies to the Appellate Tribunal.

  1. AA minimum of six months or such higher period not exceeding ten years as the NFRA determinesCorrect
  2. BA minimum of one year and a maximum of five years
  3. CAny period, with no upper limit
  4. DNot more than six months in all cases

Explanation

The Act allows the NFRA to debar the member or firm for a minimum of six months, or a higher period that does not exceed ten years, as the NFRA determines. An appeal against the order lies before the Appellate Tribunal. The other options misstate the minimum or the maximum.

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