Skip to content

CS Professional · Internal and Forensic Audit · Internal Controls

Under the Directors' Responsibility Statement requirements of the Companies Act, 2013, Kaveri Pharma Ltd is a listed company. What must its directors state about internal financial controls?

The directors of a listed company must state that they had laid down internal financial controls to be followed by the company and that those controls are adequate and were operating effectively. This puts primary responsibility on the board, not on the auditors.

  1. AThat they had laid down internal financial controls and that these are adequate and were operating effectivelyCorrect
  2. BThat the statutory auditor has designed the internal financial controls on their behalf
  3. CThat internal financial controls exist only for the accounting department
  4. DThat internal financial controls were tested by the internal auditor at least once in three years

Explanation

Section 134(5)(e) requires directors of a listed company to state that they laid down internal financial controls to be followed and that these are adequate and operating effectively. Responsibility rests with the directors, not the auditor, and no triennial testing rule or accounting-only limit is stated.

Did you get it right without looking?

One question tells you little. A timed set on Internal Controls shows your real accuracy, how long you take and where you lose marks.

Practise Internal ControlsFree diagnostic mock

More Internal Controls questions