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CMA Final · Cost and Management Audit · Operational Audit and Internal Audit under Companies Act, 2013

Which statement about the vigil mechanism under Section 177 is correct?

The vigil mechanism must provide for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. It also covers employees as well as directors, needs safeguards against victimisation, and must be disclosed on the website and in the Board's report.

  1. AIt must provide direct access to the chairperson of the Audit Committee in appropriate or exceptional casesCorrect
  2. BIt is meant for directors only and not for employees
  3. CIt need not contain safeguards against victimisation
  4. DIts details need not be disclosed on the website or in the Board's report

Explanation

Section 177(9) covers directors and employees. Section 177(10) requires adequate safeguards against victimisation and direct access to the Audit Committee chairperson in appropriate or exceptional cases. It also requires disclosure of the details on the website, if any, and in the Board's report.

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