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CA Final · Advanced Auditing, Assurance and Professional Ethics · Special Features of Audit of Banks & Non-Banking Financial Companies

The RBI, in the interest of depositors, directs Lotus Housing Finance NBFC to have a special audit of certain classes of transactions for a specified period and appoints CA Ramesh to conduct it. Who bears his remuneration, and who receives his report, under Section 45MA?

The NBFC bears the remuneration, but the amount is fixed by the Reserve Bank considering the nature and volume of work and expenses. The special auditor appointed by the Bank submits the report to the Bank, as directed under Section 45MA(3) and (4).

  1. AThe NBFC pays a fee fixed by its audit committee; the report goes to the Board
  2. BThe RBI pays from its own funds; the report goes to shareholders
  3. CThe NBFC bears the remuneration fixed by the Bank; the report is submitted to the BankCorrect
  4. DThe NBFC's statutory auditor pays him; the report goes to the Registrar

Explanation

Under Section 45MA(3), the Bank may order a special audit, appoint the auditors and direct them to submit the report to it. Under 45MA(4), the remuneration is fixed by the Bank having regard to the work and expenses, and is borne by the NBFC audited. The other options misplace who fixes the fee or who gets the report.

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