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CMA Intermediate · Corporate Accounting and Auditing · Statutory Audit under the Companies Act, 2013

Under section 177 of the Companies Act, 2013, which of the following is expressly included in the terms of reference of the Audit Committee relating to auditors?

The Audit Committee's written terms of reference must include recommending the appointment, remuneration and terms of appointment of the company's auditors. It recommends rather than finally decides, and it does not itself remove auditors or appoint a Government company's first auditor.

  1. ARecommendation for appointment, remuneration and terms of appointment of auditors of the companyCorrect
  2. BFixing the auditor's remuneration without reference to the Board
  3. CRemoval of the auditor without approval of shareholders
  4. DAppointment of the first auditor of a Government company

Explanation

Section 177(4)(i) provides that the Audit Committee's terms of reference shall include the recommendation for appointment, remuneration and terms of appointment of auditors. The other options describe powers the section does not give to the committee.

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