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

The NFRA has proved professional misconduct against a member of the Institute of Chartered Accountants of India and orders debarment. Which statement is correct under Section 132?

The NFRA may debar the member or firm for a minimum of six months, or a higher period not exceeding ten years, as it determines. The period is not fixed at five years, and the Institute cannot proceed once the NFRA has begun investigating.

  1. AThe debarment can be for a minimum of six months and up to ten years, as determined by the NFRACorrect
  2. BThe debarment must be for exactly five years
  3. CThe debarment can be for a minimum of two years and up to five years
  4. DThe debarment is decided by the Institute, since no other body may be debarred by the NFRA

Explanation

Section 132(4)(c)(B) allows debarring the member or firm from appointment as auditor or internal auditor, or from undertaking any audit, or from valuation under section 247, for a minimum of six months or such higher period not exceeding ten years as the NFRA determines. The proviso to clause (a) bars other bodies from proceeding once NFRA investigates, so the Institute does not decide it.

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