CA Final · Advanced Auditing, Assurance and Professional Ethics · Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance

Under the Companies Act, 2013, Gaurav Chemicals Ltd, a listed company, must report on CSR spending. The company spent less than the required 2% of average net profit on an ongoing project and did not transfer the unspent amount to the prescribed account within the permitted time. Which statement best describes the statutory auditor's responsibility?

The statutory auditor must report on CSR compliance under CARO 2020, covering transfer of unspent amounts to the prescribed account or fund within time, and consider any effect on the audit report. CSR is not outside audit scope, and no 5% threshold or mandatory impact-assessment certification applies.

1. AThe auditor has no responsibility, as CSR is a board matter outside the audit
2. BThe auditor must report on CSR compliance in the CARO 2020 report and, where relevant, consider the effect on the audit reportCorrect
3. CThe auditor must certify the impact assessment of the CSR project in all cases
4. DThe auditor must qualify the opinion on the standalone statements only if the CSR amount exceeds 5% of net profit