Skip to content

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

The RBI, in the public interest, directs a special audit of Lotus Housing Finance Ltd, an NBFC, for certain classes of transactions and appoints CA Firm Narayan & Co. as the special auditor. Which statement is correct under Section 45MA?

The remuneration is fixed by the Reserve Bank, having regard to the nature and volume of work and expenses, and is borne by the NBFC. Section 45MA(3) and (4) let the RBI order and appoint the special auditor, who reports to the RBI.

  1. AThe company's shareholders fix the remuneration at the AGM
  2. BThe special auditor's report is submitted to the company's board alone
  3. CThe special audit is valid only with the consent of the statutory auditor
  4. DThe remuneration is fixed by the Bank and borne by the NBFCCorrect

Explanation

Under Section 45MA(3) and (4), the Bank may order a special audit in relation to specified transactions or periods, appoint the auditors and direct them to report to it. The remuneration is fixed by the Bank, having regard to the work and expenses involved, and is borne by the NBFC. The board and shareholders have no role in fixing it.

Did you get it right without looking?

One question tells you little. A timed set on Special Features of Audit of Banks & Non-Banking Financial Companies shows your real accuracy, how long you take and where you lose marks.

Practise Special Features of Audit of Banks & Non-Banking Financial CompaniesFree diagnostic mock

More Special Features of Audit of Banks & Non-Banking Financial Companies questions