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CMA Intermediate · Corporate Accounting and Auditing · Report on Internal Financial Control over Financial Reporting

Under the Companies Act, 2013, the auditor's report of a company must state whether the company has adequate internal financial controls with reference to financial statements in place and:

The auditor must report on whether adequate internal financial controls over financial reporting exist and whether they are operating effectively. Both design adequacy and operating effectiveness are covered by the statutory reporting requirement, not staffing, remuneration or internal audit profitability matters.

  1. Athe operating effectiveness of such controlsCorrect
  2. Bthe profitability of the internal audit department
  3. Cthe adequacy of the board's remuneration policy
  4. Dthe number of internal audit staff employed

Explanation

Section 143(3)(i) requires the auditor to report on whether an adequate IFC system with reference to financial statements exists and its operating effectiveness. The other options are unrelated to the IFC reporting requirement.

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