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CS Executive · Company Law and Practice · Accounts and Auditors

Under the Companies Act, 2013, on which of the following grounds can a court or the Tribunal order re-opening of a company's books of account on an application by a person concerned?

A court or Tribunal can order re-opening when the earlier accounts were prepared in a fraudulent manner, or when mismanagement of affairs during the relevant period casts doubt on the reliability of the financial statements. Software changes, falling turnover or audit delays are not statutory grounds.

  1. AThe company changed its accounting software during the year
  2. BThe relevant earlier accounts were prepared in a fraudulent mannerCorrect
  3. CThe company's turnover fell sharply compared with the previous year
  4. DThe auditor requested more time to complete the audit

Explanation

Section 130(1) permits an order only where earlier accounts were prepared fraudulently, or the affairs were mismanaged during the relevant period casting doubt on reliability of financial statements. The other options are ordinary events and are not grounds.

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