Skip to content

CS Professional · Compliance Management, Audit and Due Diligence · Concepts of Various Audits

While auditing Ganga Steels Ltd, the auditor believes an officer has committed a fraud of Rs 80 lakh against the company. Which course must the auditor follow under the Companies Act, 2013?

Since the suspected fraud of Rs 80 lakh is below Rs 1 crore, the auditor must report it to the Audit Committee or the Board within two days of knowledge, and it is disclosed in the Board's report. Reporting to the Central Government applies only to frauds of Rs 1 crore or more.

  1. AReport to the Central Government within 60 days of knowledge after seeking the Board's reply within 45 daysCorrect
  2. BReport to the Audit Committee or Board within two days only and take no further action
  3. CIgnore it, as fraud detection is outside the auditor's duty
  4. DReport to the Registrar immediately without informing the Board

Explanation

For fraud of Rs 1 crore or above the auditor reports to the Central Government; below that threshold, the report goes to the Audit Committee or Board within two days of knowledge, with disclosure in the Board's report. Here Rs 80 lakh is below Rs 1 crore, so the Central Government route is not applicable.

Did you get it right without looking?

One question tells you little. A timed set on Concepts of Various Audits shows your real accuracy, how long you take and where you lose marks.

Practise Concepts of Various AuditsFree diagnostic mock

More Concepts of Various Audits questions