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

The RBI orders a special audit of certain transactions of Himalaya Credit Ltd, an NBFC, and appoints CA Rohan for the purpose. The company's CFO says the company will fix and pay Rohan's fees since the company is the auditee. Which statement is correct under the RBI Act, 1934?

The Bank fixes the remuneration of the special auditor, having regard to the nature and volume of work and the expenses involved, and the NBFC audited bears the cost. The company or its shareholders do not fix the fee, and the RBI does not pay it.

  1. AThe remuneration is fixed by the Bank, having regard to the nature and volume of work and expenses, and is borne by the NBFCCorrect
  2. BThe remuneration is fixed by the company's audit committee and borne by the RBI
  3. CThe remuneration is fixed by the Bank and borne by the Bank
  4. DThe remuneration is fixed by the shareholders in general meeting and borne by the NBFC

Explanation

Under section 45MA(4), the remuneration of auditors for the special audit is fixed by the Bank, considering the nature and volume of work and expenses incidental to the audit, and is borne by the NBFC audited. The CFO is wrong that the company fixes it. Option C wrongly makes the Bank bear the cost.

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