CA Intermediate · Auditing and Ethics · Nature, Objective and Scope of Audit
Under the Companies Act, 2013, the board of Ganga Pharma Ltd asks its statutory auditor to also certify the company's compliance with a labour welfare scheme that is not required by any law or by the Standards on Auditing. The auditor accepts and issues the certificate as part of the same engagement. What is the correct position regarding the auditor's primary duty?
The statutory auditor's primary duty is to report on whether the financial statements give a true and fair view. A voluntary certificate on a welfare scheme is a separate permitted engagement and neither replaces nor dilutes that opinion. Only services specifically prohibited by the Companies Act are barred.
- AThe statutory audit duty is to report on the financial statements; extra certification is a separate engagement and does not replace or dilute the audit opinionCorrect
- BThe extra certificate becomes part of the statutory audit report and must be filed with the Registrar
- CThe auditor must refuse because he cannot undertake any other work for the company
- DThe extra certification replaces the need to report on internal financial controls
Explanation
The statutory auditor's core responsibility is to express an opinion on whether the financial statements give a true and fair view. Additional services may be accepted if permitted and not prohibited, but they are separate and do not alter the audit opinion. Option C is wrong because only specified services listed in the Act are prohibited, not all other work.
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