{"id":8613,"date":"2024-02-24T16:01:24","date_gmt":"2024-02-24T10:31:24","guid":{"rendered":"https:\/\/gstguntur.com\/?p=8613"},"modified":"2024-02-26T09:43:38","modified_gmt":"2024-02-26T04:13:38","slug":"audit-and-auditors-under-companies-act-2013-basic-provisions-cs-foundation-fundamentals-of-auditing-notes","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/audit-and-auditors-under-companies-act-2013-basic-provisions-cs-foundation-fundamentals-of-auditing-notes\/","title":{"rendered":"Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions &#8211; CS Foundation Fundamentals of Auditing Notes"},"content":{"rendered":"<p>Go through this Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions \u2013 <a href=\"https:\/\/gstguntur.com\/cs-foundation-fundamentals-of-accounting-and-auditing-notes\/\">CS Foundation Fundamentals of Accounting and Auditing Notes<\/a>\u00a0will help students in revising the entire subject quickly.<\/p>\n<h2>Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions &#8211; CS Foundation Fundamentals of Auditing Notes<\/h2>\n<p>Auditor &#8211; an introduction:<\/p>\n<ul>\n<li>A person who conducts an audit is known as an auditor.<\/li>\n<li>He is charged with the responsibility of reporting whether the books show a true or fair view or not.<\/li>\n<li>Auditor does not have any connection with the company.<\/li>\n<\/ul>\n<p>Types of Auditor:<br \/>\n1. Internal auditor:<br \/>\nHe acts as an employee of the company and is responsible for conducting periodical audits.<\/p>\n<p>2. External Auditor:<br \/>\nThe organizations are also required to get their accounts audited by an external agency. These are known as the external auditors.<br \/>\nExternal auditors are not the employees of the company and hence management cannot influence triem.<\/p>\n<p>Appointment of Auditor:<\/p>\n<ul>\n<li>Appointment, qualifications, disqualifications etc of the auditors are governed by the Companies Act 2013.<\/li>\n<li>Auditors are appointed under Sec. 139 of The Companies Act, 2013.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-8619\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-2.png\" alt=\"Audit and Auditors Under Companies Act, 2013 - Basic Provisions - CS Foundation Fundamentals of Auditing Notes - 2\" width=\"474\" height=\"65\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-2.png 474w, https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-2-300x41.png 300w\" sizes=\"(max-width: 474px) 100vw, 474px\" \/><\/p>\n<p>Appointment of first auditors [Sec. 139(6)]<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-8620\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-1.png\" alt=\"Audit and Auditors Under Companies Act, 2013 - Basic Provisions - CS Foundation Fundamentals of Auditing Notes - 1\" width=\"524\" height=\"62\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-1.png 524w, https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-1-300x35.png 300w\" sizes=\"(max-width: 524px) 100vw, 524px\" \/><\/p>\n<ul>\n<li>Such auditor shall hdld office till the conclusion of first AGM.<\/li>\n<li>Such auditor can be removed by a company in general meeting.<\/li>\n<li>Company is not required to send any information to the registrar for the appointment of the first auditor.<\/li>\n<\/ul>\n<p>Appointment of Subsequent Auditor [Section 139(1)]:<\/p>\n<ul>\n<li>Every subsequent appointment of auditor is done by shareholders in general meeting.<\/li>\n<li>Every company shall, at its first AGM, appoint an individual or a firm, as an auditor, who shall hold office from the<\/li>\n<li>conclusion of that meeting till the conclusion of every 6th AGM and thereafter till the conclusion of every 6th meeting.<\/li>\n<li>Every company shall place the matter relating to such appointment for ratification by members at every AGM.<\/li>\n<li>Before appointment the company should obtain a wr itten consent and a certificate from the auditor. Such certificate shall indicate whether the auditor satisfies the criteria provided in Section 141.<\/li>\n<li>After appointment, the company shall inform the auditor of his appointment and also file a notice of such appointment with registrar within 15 days of concerned AGM.<\/li>\n<li>If at any AGM, no auditor is appointed or reappointed, the existing auditor shall continue to be the auditor of the company.<\/li>\n<\/ul>\n<p>Appointment to fill the casual vacancy [Sec 139(8)]:<\/p>\n<ul>\n<li>Casual vacancy means vacancy created by the auditor ceasing to act after being validly appointed.<\/li>\n<li>It can occur on account of following reasons: resignation, death, disqualification, etc.<\/li>\n<li>Such auditor shall hold office till conclusion of next A.G.M<\/li>\n<li>Any casual vacancy other than government company, shall be filled by the BoDs within 30 days.<\/li>\n<li>If Vacancy is result of registration of an auditor it shall be also approved by the company at a general meeting convened with in months of the recommendation.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-8621\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-3.png\" alt=\"Audit and Auditors Under Companies Act, 2013 - Basic Provisions - CS Foundation Fundamentals of Auditing Notes - 3\" width=\"470\" height=\"104\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-3.png 470w, https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/Audit-and-Auditors-Under-Companies-Act-2013-Basic-Provisions-CS-Foundation-Fundamentals-of-Auditing-Notes-3-300x66.png 300w\" sizes=\"(max-width: 470px) 100vw, 470px\" \/><\/p>\n<p>Note this:<br \/>\nA casual vacancy can be created only when the appointment was effective eg- If Mr. X refused to accept appointment it will not be said to be a casual vacancy.<\/p>\n<ul>\n<li>Casual vacancy shall be filled after taking into account the recommendation of audit committee.<\/li>\n<\/ul>\n<p>Appointment of Auditors of Government Companies :<br \/>\n(1) First Auditor:<\/p>\n<ul>\n<li>The Comptroller and Auditor-General ol India shall appoint the first auditor of the Government Company within 60 days from the date of incorporation.<\/li>\n<li>In case of failure to do so the BoD(s) of the company shall appoint such auditors within the next 30 days.<\/li>\n<li>Or in case of failure of BoD(s) members of the company shall appoint such auditor within the 60 days at an EGM, such auditor shall loss office till conclusion of First AGM.<\/li>\n<\/ul>\n<p>(2) Subsequent Auditor:<br \/>\nIn respect of financial year the Comptroller and Auditor-General of India shall appoint an auditor within a period of one hundred and eighty days (180 days) from the commencement of the financial year.<\/p>\n<p>(3) Casual Auditor:<\/p>\n<ul>\n<li>Any casual vacancy in the office of an auditor of a government company shall be filled by the Comptroller and Auditor-General of India within 30 days.<\/li>\n<li>Or in failure of Comptroller and Auditor General of India by the BoD(s) within next 30 days.<\/li>\n<\/ul>\n<p>Mandatory Rotation of Auditors:<br \/>\nThe Companies Act, 2013 has introduced the system of rotation of auditors which is applicable to:<\/p>\n<ul>\n<li>All listed companies.<\/li>\n<li>All unlisted companies, having paid up share capital of \u20b9 10 crore or more;<\/li>\n<li>All private companies having paid up share capital of \u20b9 20 crore or more;<\/li>\n<li>All companies having public borrowing from financial institutions, banks or public deposits of \u20b9 50 crore or more.<\/li>\n<li>The concept of rotation of auditors shall not apply to one person companies.<\/li>\n<li>All the companies mentioned above shall not appoint or re-appoint an individual as an auditor of the company for more than 1 term of 5 consecutive years.<\/li>\n<li>All the companies mentioned above shall not appoint or re-appoint an audit firm as an auditor of the company for more than 2 terms of 5 consecutive years.<\/li>\n<\/ul>\n<p>Remuneration of the Auditors:<\/p>\n<ul>\n<li>The remuneration of the auditor of a company shall be fixed in its General Meeting.<\/li>\n<li>The Board may fix remuneration of the first auditor appointed by it. The remuneration shall be in addition to the fee payable to an auditor, includes the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility extended to him.<\/li>\n<\/ul>\n<p>Qualification and Disqualification of Auditors:<\/p>\n<p>Qualification [Sec 141(1) &amp; 141(2)]:<\/p>\n<ul>\n<li>Only a CA (individual) or a firm where majority of partners practicing in India are CA can be appointed as auditor.<\/li>\n<li>Where a firm including an LLP is appointed as an auditor, only the partners who are CA shall be authorised to act and sign on behalf of the firm.<\/li>\n<\/ul>\n<p>Disqualification [Sec. 141(3)]:<\/p>\n<p>An auditor should not be a _________<\/p>\n<ul>\n<li>a body corporate except LLP<\/li>\n<li>an officer or employee of the company<\/li>\n<li>any partner or employee of office or employee of a company<\/li>\n<li>a person who himself or his relative or partner<\/li>\n<\/ul>\n<p>(i) is holding any security or interest in the company, or any company which is its holding, subsidiary, associate;<br \/>\nProvided that Relative may hold security or interest not exceeding \u20b9 1 Lac in above mentioned companies.<\/p>\n<p>(ii) is indebted to the company or its subsidiary, holding or associate company or a subsidiary of such holding company, in excess of \u20b9 5 Lacs.<\/p>\n<p>(iii) has given a guarantee or provided any security in connection with the indebted-ness of any third person to the company or its subsidiary, holding or associate company or a subsidiary of such holding company, in excess of \u20b9 1 Lac.<\/p>\n<p>person or a firm who, whether directly or indirectly has the business relationship with the company or its subsidiary, holding or associate company.<\/p>\n<ul>\n<li>a person whose relative is a director or is in the employ-ment of the company as a director or key managerial personnel (kmp).<\/li>\n<li>a person who is a full time employment else where.<\/li>\n<li>a person who is the auditor of more than 20 companies.<\/li>\n<li>a person who has been convicted by the court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction.<\/li>\n<li>a person whose subsidiary or associate company or any other form of company, is engaged as on the date of appointment in consulting and specialised services as provided in Section 144.<\/li>\n<\/ul>\n<p>Points to be noted:<\/p>\n<ul>\n<li>A firm can be appointed as an auditor if all the partners of the firm are practicing Chartered Accountant.<\/li>\n<li>Even if any one of the partners is disqualified under 141 (3), the whole firm will be disqualified .<\/li>\n<li>If a person is insolvent or of an unsound mind, he ceases to be a member of CA and automatically be disqualified for appointment as an auditor.<\/li>\n<li>If any relative of CA has substantial interest in the company, he should disclose his interest.<\/li>\n<li>The department of company affairs has clarified that a statutory auditor cannot act as internal auditor of the company.<\/li>\n<\/ul>\n<p>Rights of the Auditor:<\/p>\n<ul>\n<li>Right to access the books of account<\/li>\n<li>Right to obtain information and explanation from officers.<\/li>\n<li>Right to receive notice of and attend general meetings<\/li>\n<li>Right to visit branch offices and access books<\/li>\n<li>Right to receive notice for removal<\/li>\n<li>Right to make a representation on removal<\/li>\n<li>Right to receive remuneration<\/li>\n<li>Right to sign the audit report.<\/li>\n<\/ul>\n<p>Duties of the Auditor [Section 143(1)]:<\/p>\n<ul>\n<li>Proper examination of books of account<\/li>\n<li>Report to the members<\/li>\n<li>Make adequate disclosure in audit report<\/li>\n<\/ul>\n<p>To inquire into the following matters:<br \/>\n(a) whether loans and advances made by the company are properly secured and terms and conditions are prejudicial to the interest of the co. and its members.<br \/>\n(b) whether transactions of the company represented merely by book entries are prejudicial to the interest of the company .<br \/>\n(c) Where the company is not an investment or banking company, whether the securities have been sold at a price less than the purchase price.<br \/>\n(d) whether loans and advances made by the company have been shown as deposits.<br \/>\n(e) whether personal expenses have been charged to revenue.<br \/>\n(f) whether cash has actually been received in case of shares allotted for cash.<\/p>\n<p>Auditor not to render certain services:<\/p>\n<ol>\n<li>Accounting and book keeping services.<\/li>\n<li>Internal Audit<\/li>\n<li>Design and implementation of any financial information system<\/li>\n<li>Actuarial Services<\/li>\n<li>Investment advisory services<\/li>\n<li>Investment banking services<\/li>\n<li>Rendering of outsourced financial services<\/li>\n<li>Management services and<\/li>\n<li>Any other kind of services as may be prescribed.<\/li>\n<\/ol>\n<p>Auditor&#8217;s Report [Section 143(2)]:<\/p>\n<ul>\n<li>Auditor shall make a report to the members of the company on the accounts examined by him and on every financial statement which is required to be laid before the general meeting of the company.<\/li>\n<\/ul>\n<p>The auditors report besides other things shall also state other details as following &#8211;<\/p>\n<ol>\n<li>Whether he has obtained all the necessary information and explanation for the purpose of his audit.<\/li>\n<li>Whether proper books of accounts as required by the law have been kept by the company and proper returns have been received from branches not visited by him.<\/li>\n<li>Whether branch audit report prepared by person other than company\u2019s auditor has been sent to him.<\/li>\n<li>Whether company\u2019s financial statement are in agreement with the books of accounts and returns.<\/li>\n<li>Whether financial statements comply with the accounting standard.<\/li>\n<li>Observation or comments of the auditors on the financial transactions or matter which have any adverse effect on the functioning of the company.<\/li>\n<li>Whether any director is disqualified from being appointed as a director under section 164 (2).<\/li>\n<li>\u00a0any qualification, reservation or adverse remark relating to the maintenance of accounts and other connected matters.<\/li>\n<li>Whether company has adequate internal financial control system.<\/li>\n<li>The auditor\u2019s report shall include their views and comments on:<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Whether the company has disclosed the impact of pending litigations on its financial position in its financial statement.<\/li>\n<li>Whether the company has made provision for material foreseeable losses if any, on long term contracts including derivative contracts.<\/li>\n<li>Whether there has been any delay in transferring amounts to the Investor Education and Protection Fund by the company.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Importance of Audit Report:<\/p>\n<ol>\n<li>Audit Report helps an auditor to express his opinion on financial statements<\/li>\n<li>It shows the scope of work done and the responsibility assumed by the auditor while conducting audit.<\/li>\n<li>The conclusions drawn by the auditor are communicated to the management through audit report<\/li>\n<li>It helps the shareholders of the company to know the state of affairs of the company<\/li>\n<\/ol>\n<p>Elements (Essentials) of Audit Report:<\/p>\n<ol>\n<li>Title<\/li>\n<li>Addressee<\/li>\n<li>Identification<\/li>\n<li>Reference to Auditing Standards<\/li>\n<li>Opinion<\/li>\n<li>Date of report<\/li>\n<li>Auditor\u2019s Address<\/li>\n<li>Auditor&#8217;s signature.<\/li>\n<li>Description of the responsibility of management.<\/li>\n<li>Place of signature<\/li>\n<\/ol>\n<p style=\"text-align: left;\">Specimen Of Audit Report:<br \/>\nAuditor\u2019s Report &#8211; Title<br \/>\nTo the shareholders of _________ . (company name) &#8211; Addressing<br \/>\n1. We have audited the B.S of _________ &#8211; Opening paragraph (Identification)<br \/>\n2. We conducted our audit in accordance with the auditing standards _________ &#8211; Scope paragraph (Ref. to auditing std.)<br \/>\n3. In accordance with Section 143 (2) of Companies Act, 2013, we report as under _________ &#8211; Opinion paragraph<br \/>\n(i) _________<br \/>\n(ii) _________<br \/>\n(iii) _________<br \/>\n(iv) _________<br \/>\n(v) _________<br \/>\n(vi) _________<br \/>\n(vii) _________<br \/>\n(viii) _________<br \/>\n(ix) _________<\/p>\n<p style=\"text-align: right;\">Sd\/ &#8230;&#8230;&#8230;&#8230;..<br \/>\n(Firm Name)<br \/>\n(Name of Partner)<\/p>\n<p style=\"text-align: left;\">Place:<br \/>\nDate:<\/p>\n<p>Auditor&#8217;s opinion:<\/p>\n<ul>\n<li>it is the duty of the auditor to express his opinion on the books and accounts examined by him.<\/li>\n<li>Auditor&#8217;s opinion can be of the foilowing types:<\/li>\n<\/ul>\n<p>(a) Unqualified opinion<br \/>\n(b) Adverse opinion<br \/>\n(c) Qualified opinion<br \/>\n(d) Disclaimer of opinion<\/p>\n<p>(a) Unqualified opinion:<\/p>\n<ul>\n<li>It is given when auditor has no reservations or objections regarding the information under audit.<\/li>\n<li>This shows that according to the audit the books and account show a true and fair view.<\/li>\n<li>It is also known as the clean report.<\/li>\n<\/ul>\n<p>(b) Adverse \/ Negative opinion:<\/p>\n<ul>\n<li>an auditor gives an adverse or negative opinion when he does not agree with the books and accounts examined by him.<\/li>\n<li>It is given when the reservation on matters are so significant that they destroy the true and fair view of books and accounts (financial statements)<\/li>\n<\/ul>\n<p>(c) Qualified opinion:<\/p>\n<ul>\n<li>This is given when the auditor has some reservations about the financial statements.<\/li>\n<li>These reservations are not so significant, but still relevant<\/li>\n<li>This opinion means that \u201csubject\u201d to certain matters, the auditor agrees with the financial statements that they are true and fairly viewed and by that he gives qualified opinion.<\/li>\n<li>It is a situation when the reservations are not so significant so as to give an adverse opinion and not so insignificant so as to give an unqualified opinion.<\/li>\n<\/ul>\n<p>(d) Disclaimer of opinion:<\/p>\n<ul>\n<li>When an auditor is not able to collect appropriate audit evidence, then he must give a disclaimer of opinion.<\/li>\n<li>Disclaimer of opinion shows that adequate books\/accounts and other information were not being provided to the auditor so that he can form an audit opinion.<\/li>\n<li>The auditor should give a reason for giving a disclaimer of opinion. So that the readers can assess their significant and effect.<\/li>\n<\/ul>\n<p>Branch Audit:<br \/>\nIf any company has a branch office, the accounts of that office shall be audited either by the auditor of the company or by any other person qualified for appointment as an auditor of the company or appointed as auditor under the Act.<\/p>\n<p>Secretarial Audit:<br \/>\nSecretarial audit is an audit to check compliance ot various legislation including the Companies Act and other corporate and economic laws applicable to the company.<br \/>\nAs per Companies Act, 2013 and the ComparHes (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following companies are required to obtain Seci-etarial Audit Report:<\/p>\n<ul>\n<li>Every hsted company<\/li>\n<li>Every public company having a paid-up capital of 54) crore or more.<br \/>\nor<\/li>\n<li>Every public company having a turnover of 250 crore or more.<\/li>\n<\/ul>\n<p>Eligibility:<br \/>\nCompany Secretary in practice.<br \/>\nSecretarial Auditor needs to examine and report on the compliance of the following five specific laws:<br \/>\n1. The Companies Act, 2013 and the rules macfe under there,<br \/>\n2. The Securities Contracts (Regulation) Act, 1956 (SCRA),<br \/>\nThe Depositories Act. 1996 and the regulations and Bye-laws framed thereunder. Foreign Exchange Manageaient Act, 1999 and the rules and regulations made under there. The Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act).<\/p>\n<p>Modified Report:<br \/>\nAn auditor\u2019s report Is considered to be modified when it includes:<br \/>\n(a) Matters that do not affect the auditors opinion-emphasis of matter<br \/>\n(b) Matters that do affect the auditor\u2019s opinion<br \/>\nqualified opinion<br \/>\ndisclaim of opinion<br \/>\nadverse opinion<\/p>\n<p><strong>Audit and Auditors Under Companies Act, 2013-Basic Provisions<\/strong> <strong>MCQ Questions<\/strong><\/p>\n<p>1. External auditor is an employee of the company. State true or false.<br \/>\n(a) True<br \/>\n(b) False<br \/>\n(c) Partly true<br \/>\n(d) None.<br \/>\nAnswer:<br \/>\n(b) False<\/p>\n<p>2. Appointment of auditors is made under section _________ of the Companies Act 2013.<br \/>\n(a) 139(1)<br \/>\n(b) 139(2)<br \/>\n(c) 139(3)<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(a) 139(1)<\/p>\n<p>3. The first auditor of the company shall be appointed within _________ of the Registration of the company.<br \/>\n(a) 6 months<br \/>\n(b) 1 month<br \/>\n(c) 7 days<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(b) 1 month<\/p>\n<p>4. Which of the following is NOT an essential of an audit report?<br \/>\n(a) Title<br \/>\n(b) Date of report<br \/>\n(c) Summary<br \/>\n(d) Opinion.<br \/>\nAnswer:<br \/>\n(c) Summary<\/p>\n<p>5. Mr. A was appointed as the auditor of the company. Two months after his appointment, he resigned from the post on some personal grounds. Board of Directors filled the vacancy by appointing Mr. Q. Is the appointment of Mr. Q valid?<br \/>\n(a) Yes<br \/>\n(b) No<br \/>\n(c) Can&#8217;t say<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(b) No<\/p>\n<p>6. An auditor appointed to fill casual vacancy shall hold office till:<br \/>\n(a) The year end<br \/>\n(b) Conclusion of next AGM<br \/>\n(c) The desire of Board of Directors<br \/>\n(d) Any of these<br \/>\nAnswer:<br \/>\n(b) Conclusion of next AGM<\/p>\n<p>7. When the auditor has a few reservations which he wants to bring to the notice of the stakeholders, then he issues:<br \/>\n(a) Qualified opinion<br \/>\n(b) Adverse opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) Unqualified opinion.<br \/>\nAnswer:<br \/>\n(a) Qualified opinion<\/p>\n<p>8. Qualifications and disqualification of an auditor are explained under:<br \/>\n(a) Sec 141<br \/>\n(b) Sec 142<br \/>\n(c) Sec 143<br \/>\n(d) Sec 144<br \/>\nAnswer:<br \/>\n(a) Sec 141<\/p>\n<p>9. An auditor not having a certificate of practice can also become an auditor of the Company. This statement is:<br \/>\n(a) True<br \/>\n(b) False<br \/>\n(c) Partly true<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(b) False<\/p>\n<p>10. ABC &amp; Associates is a firm of Chartered Accountants wherein B and C hold a part time certificate of practice. Can the firm ABC &amp; Associates be appointed as an auditor of the company?<br \/>\n(a) Yes, since atleast one partner holds full time COP.<br \/>\n(b) Yes, the firm is comprised of practicing chartered accountants either full time or part time.<br \/>\n(c) No, since all partners should hold a full time COP<br \/>\n(d) None of these.<br \/>\nAnswer:<br \/>\n(b) Yes, the firm is comprised of practicing chartered accountants either full time or part time.<\/p>\n<p>11. Which of these is not one of the rights of the auditor?<br \/>\n(a) Right to receive remuneration<br \/>\n(b) Right to access books of account<br \/>\n(c) Right to remove a director<br \/>\n(d) Right of lien<br \/>\nAnswer:<br \/>\n(c) Right to remove a director<\/p>\n<p>12. Which of these is not an element of Audit Report?<br \/>\n(a) Title<br \/>\n(b)Addressee<br \/>\n(c) Name of auditor<br \/>\n(d) None of these.<br \/>\nAnswer:<br \/>\n(c) Name of auditor<\/p>\n<p>13. Where the auditor is unable to give his opinion due to insufficiency of evidence, then he gives:<br \/>\n(a) Adverse opinion<br \/>\n(b) Disclaimer of opinion<br \/>\n(c) Qualified opinion<br \/>\n(d) Unqualified opinion.<br \/>\nAnswer:<br \/>\n(b) Disclaimer of opinion<\/p>\n<p>14. When an auditor has no reservations regarding the information then he gives a<br \/>\n(a) Qualified opinion<br \/>\n(b) Unqualified opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(b) Unqualified opinion<\/p>\n<p>15. If an auditor is not able to draw appropriate audit conclusions due to lack of audit evidence and available information, he shall give:<br \/>\n(a) Qualified opinion<br \/>\n(b) Unqualified opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(c) Disclaimer of opinion<\/p>\n<p>16. &#8230;&#8230;&#8230;&#8230;&#8230;.. is also known as the clean report:<br \/>\n(a) Qualified Report<br \/>\n(b) Unqualified Report<br \/>\n(c) Disclaimer<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(b) Unqualified Report<\/p>\n<p>17. When reservations are so significant that they destroy the true and fair view of books, the auditor gives-<br \/>\n(a) Qualified Report<br \/>\n(b) Adverse Report<br \/>\n(c) Disclaimer<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(b) Adverse Report<\/p>\n<p>18. A persons who conduct an audit is:<br \/>\n(a) Auditor<br \/>\n(b) First auditor<br \/>\n(c) Subsequent auditor<br \/>\n(d) All of the above<br \/>\nAnswer:<br \/>\n(a) Auditor<\/p>\n<p>19. Appointment of first auditor is made under which section:<br \/>\n(a) Section 139(1)<br \/>\n(b) Section 139(2)<br \/>\n(c) Section 139(3)<br \/>\n(d) Section 139(6)<br \/>\nAnswer:<br \/>\n(d) Section 139(6)<\/p>\n<p>20. When an auditor is not able to collect appropriate audit evidence, then he must give which opinion:<br \/>\n(a) Adverse opinion<br \/>\n(b) Qualified opinion<br \/>\n(c) Unqualified opinion<br \/>\n(d) Disclaimer<br \/>\nAnswer:<br \/>\n(d) Disclaimer<\/p>\n<p>21. An auditor may function as:<br \/>\n(a) Employee<br \/>\n(b) Independent Professional<br \/>\n(c) Both<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(c) Both<\/p>\n<p>22. The first auditor appointed shall hold office till:<br \/>\n(a) End of company<br \/>\n(b) End of 2 years<br \/>\n(c) End of 1st year<br \/>\n(d) End of first A.G.M.<br \/>\nAnswer:<br \/>\n(d) End of first A.G.M.3<\/p>\n<p>23. _________ is not a right\/power of auditor:<br \/>\n(a) To receive remuneration<br \/>\n(b) To sign the audit report<br \/>\n(c) To check position as stated is correct<br \/>\n(d) Both (a) &amp; (b)<br \/>\nAnswer:<br \/>\n(c) To check position as stated is correct<\/p>\n<p>24. Sec. _________ contains the Auditor\u2019s opinion that financial statements comply with Accounting standards<br \/>\n(a) 143(1)<br \/>\n(b) 143(2)<br \/>\n(c) 143(3)<br \/>\n(d) 143 (2A)<br \/>\nAnswer:<br \/>\n(b) 143(2)<\/p>\n<p>25. When the auditor does not agree with the true and fair view of financial position, he expresses which opinion<br \/>\n(a) Unqualified<br \/>\n(b) Qualified<br \/>\n(c) Adverse<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(c) Adverse<\/p>\n<p>26. Vacancy caused by resignation of auditor shall only be filled by<br \/>\n(a) Company in A.G.M.<br \/>\n(b) Central Government<br \/>\n(c) Board of Director<br \/>\n(d) Chartered Accountant<br \/>\nAnswer:<br \/>\n(c) Board of Director<\/p>\n<p>27. Sec. 141 provides that only a _________ in practice can act as an auditor of a Limited Company.<br \/>\n(a) Company Secretary<br \/>\n(b) Director<br \/>\n(c) Chartered Accountant<br \/>\n(d) Both (a) &amp; (c)<br \/>\nAnswer:<br \/>\n(c) Chartered Accountant<\/p>\n<p>28. Auditors report is laid down before company is<br \/>\n(a) General Meeting<br \/>\n(b) Annual General Meeting<br \/>\n(c) Emergency General Meeting<br \/>\n(d) Any of above<br \/>\nAnswer:<br \/>\n(a) General Meeting<\/p>\n<p>29. Even if any one partner is disqualified, the whole firm will<br \/>\n(a) Remain qualified<br \/>\n(b) As per situation<br \/>\n(c) Disqualified<br \/>\n(d) None<br \/>\nAnswer:<br \/>\n(c) Disqualified<\/p>\n<p>30. If any relative of CA has substantial interest in the company, he should _________<br \/>\n(a) Not disclose<br \/>\n(b) Disclose<br \/>\n(c) His wish<br \/>\n(d) As per company<br \/>\nAnswer:<br \/>\n(b) Disclose<\/p>\n<p>31. The first auditor of the company is appointed by:<br \/>\n(a) Board of directors<br \/>\n(b) Shareholders<br \/>\n(c) Central Government<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(a) Board of directors<\/p>\n<p>32. The first auditor should be appointed within:<br \/>\n(a) 2 months of incorporation<br \/>\n(b) 1 month from the date of incorporation<br \/>\n(c) 3 months from the date of commencement of business<br \/>\n(d) Within 7 days of incorporation.<br \/>\nAnswer:<br \/>\n(b) 1 month from the date of incorporation<\/p>\n<p>33. Where the auditor does not have any reservation, objection regarding the information under audit, then he gives:<br \/>\n(a) Unqualified opinion<br \/>\n(b) Qualified opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) Negative opinion.<br \/>\nAnswer:<br \/>\n(a) Unqualified opinion<\/p>\n<p>34. If a partner of an audit firm is disqualified, then:<br \/>\n(a) The firm will be disqualified<br \/>\n(b) The firm will not be disqualified<br \/>\n(c) Both (a) &amp; (b)<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(a) The firm will be disqualified<\/p>\n<p>35. Which of the following is NOT a right of an auditor?<br \/>\n(a) Right to access books of accounts<br \/>\n(b) Right to receive dividend<br \/>\n(c) Right to visit the branch office<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(b) Right to receive dividend<\/p>\n<p>36. The duties of an auditor are contained under which section of the Companies Act, 2013?<br \/>\n(a) Section 143(1)<br \/>\n(b) Section 143(2)<br \/>\n(c) Section 143(3)<br \/>\n(d) Section 143(4).<br \/>\nAnswer:<br \/>\n(a) Section 143(1)<\/p>\n<p>37. The observations of the auditor which have an adverse effect on the functioning are written in:<br \/>\n(a) Thick type<br \/>\n(b) Italics<br \/>\n(c) Colored text<br \/>\n(d) Either (a) or (b)<br \/>\nAnswer:<br \/>\n(d) Either (a) or (b)<\/p>\n<p>38. Who appoints the subsequent auditors of a company:<br \/>\n(a) Shareholders<br \/>\n(b) Central Government<br \/>\n(c) Board of directors<br \/>\n(d) Registrar of companies<br \/>\nAnswer:<br \/>\n(a) Shareholders<br \/>\nSection 139(1) of The Companies Act, 2013 contains provisions<br \/>\nregarding the appointment of the auditor. As per this section, the auditor of a company can be appointed by the shareholders.<\/p>\n<p>39. Board meeting is the meeting of:<br \/>\n(a) Shareholders<br \/>\n(b) Government<br \/>\n(c) Creditors and debtors<br \/>\n(d) Directors of the company<br \/>\nAnswer:<br \/>\n(d) Directors of the company<br \/>\nBoard Meeting refers to the meeting of Board of Directors of the Company.<\/p>\n<p>40. A statutory auditor reports to:<br \/>\n(a) Debenture holders<br \/>\n(b) Central Government<br \/>\n(c) Board of directors<br \/>\n(d) Share holders<br \/>\nAnswer:<br \/>\n(d) Share holders<br \/>\nUnder Section 143(2) of the companies Act, 2013, it is the duty of the auditor to make a report to the members of the company on the accounts examined by him. Audit report can be regarded as a formal communication by the auditor to the shareholders throwing light on the state of affairs of the company. Audit Report is addressed to the members of the company and is considered at the AGM.<\/p>\n<p>41. When an auditor does not have any reservation\/objection regarding the information under audit, which type of audit report is issued to him?<br \/>\n(a) Qualified report<br \/>\n(b) Clean report<br \/>\n(c) Adverse audit report<br \/>\n(d) Disclaimer of opinion<br \/>\nAnswer:<br \/>\n(b) Clean report<br \/>\nWhere auditor does not have any reservation, objection regarding the information under audit, then he issues an unqualified opinion. It is also known as Clean Report.<\/p>\n<p>42. The first auditor of a company is appointed:<br \/>\n(a) Within one month of completion of capital subscription of the company<br \/>\n(b) Within one month of promotion of the company<br \/>\n(c) Within one month of the commencement of the business of the company<br \/>\n(d) Within one month of incorporation of the company.<br \/>\nAnswer:<br \/>\n(d) Within one month of incorporation of the company.<br \/>\nSection 139(6) provides that the first auditor or auditors are to be<br \/>\nappointed by the Board of Directors within one month of the date of the registration of the company.<br \/>\nIn case the Board of Directors fails to appoint the first auditors within one month of its incorporation the company in general meeting may appoint the first auditors.<\/p>\n<p>43. The duties of a company auditor are defined under\/in:<br \/>\n(a) Memorandum of association<br \/>\n(b) Articles of association<br \/>\n(c) Companies Act, 2013<br \/>\n(d) Agreement between company and the auditor<br \/>\nAnswer:<br \/>\n(d) Agreement between company and the auditor<br \/>\nDuties of an auditor are many and varied. Such duties of an auditor are determined by an agreement between the company and the auditor.<br \/>\nAuditor must examine the original books of account kept by the company to discover any inaccuracies or omission therein, to examine company\u2019s balance sheet and profit and loss account and report on the original books of account and the annual accounts to the members. However, the company\u2019s management cannot in any manner what soever limit the scope of audit.<\/p>\n<p>44. Under which meeting is an auditor usually appointed\u20b9<br \/>\n(a) Board meeting<br \/>\n(b) Shareholders meeting or general meeting<br \/>\n(c) Debenture holders meeting<br \/>\n(d) Class meeting<br \/>\nAnswer:<br \/>\n(b) Shareholders meeting or general meeting<br \/>\nSection 139(1) of the Companies Act, 2013 contains provisions regarding the appointment of the auditor. As per this section, the auditor of any company can be appointed by the shareholders in general meeting who shall hold office till conclusion of its 6th AGM.<\/p>\n<p>45. Casual vacancy arising due to resignation of an auditor may be filled by:<br \/>\n(a) Board of director<br \/>\n(b) Shareholder\u2019s in general meeting<br \/>\n(c) Audit committee<br \/>\n(d) Debenture holders<br \/>\nAnswer:<br \/>\n(a) Board of director<br \/>\nIf a casually vacancy arises due to resignation of auditor then new auditor will be appointed by Board of Directors but such appointment shall be approved by the shareholders in their EGM.<\/p>\n<p>46. Due to lack of audit evidences, auditor issues a:<br \/>\n(a) Qualified opinion<br \/>\n(b) Unqualified opinion<br \/>\n(c) Adverse opinion<br \/>\n(d) Disclaimer of opinion<br \/>\nAnswer:<br \/>\n(d) Disclaimer of opinion<br \/>\nWhere there is a situation where auditor is not in a position to collect sufficient appropriate audit evidence which enables him to draw his conclusion then it is proper for the auditor to disclaim an opinion due to lack of sufficient appropriate audit evidence.<\/p>\n<p>47. In which section of The Companies Act, 2013, the provisions relating to an Auditor\u2019s Report are covered\u20b9<br \/>\n(a) Section 143 (1)<br \/>\n(b) Section 143 (2)<br \/>\n(c) Section 143 (3)<br \/>\n(d) Section 143 (4).<br \/>\nAnswer:<br \/>\n(b) Section 143 (2)<br \/>\nUnder Section 143(2) of the Companies Act, 2013, it is the duty of the auditor to make a report to the members of the company on the accounts examined by him.<\/p>\n<p>48. The board of directors shall appoint first auditor of a company:<br \/>\n(a) within one month of completion of capital subscription by the company<br \/>\n(b) within one month of the promotion of the company<br \/>\n(c) Within one month of the commencement of the business of the company<br \/>\n(d) Within one month of incorporation of the company.<br \/>\nAnswer:<br \/>\n(d) Within one month of incorporation of the company.<br \/>\nSection 139(6) provides that the first auditors are to be appointed by the Board of directors within one month of the date of the registration of the company. In case the BOD fails to appoint the first auditors within one month of its incorporation the company in general meeting may appoint the first auditors.<\/p>\n<p>49. The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express\u20b9<br \/>\n(a) Unqualified opinion<br \/>\n(b) Qualified opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) Adverse opinion.<br \/>\nAnswer:<br \/>\n(b) In a situation where neither the unqualified, nor adverse opinion is appropriate, the auditor gives the qualified opinion. This is a situation where the auditor has some reservation about the financial statements which though significant but not that significant so as to warrant adverse opinion and auditor agrees to a large extent with the true and fair view of the financial statement that he gives a qualified opinion.<\/p>\n<p>50. \u2018Disclaimer of Opinion\u2019 means:<br \/>\n(a) The auditor gives clean report<br \/>\n(b) The auditor gives qualified report<br \/>\n(c) The auditor gives adverse report<br \/>\n(d) The auditor is unable to expresses his opinion.<br \/>\nAnswer:<br \/>\n(d) The auditor is unable to expresses his opinion.<br \/>\nDisclaimer of Opinion is a situation when auditor is not in a position to give his opinion.<\/p>\n<p>51. Statutory audit report of a company is addressed to:<br \/>\n(a) Board of Directors<br \/>\n(b) Ministry of Corporate Affairs<br \/>\n(c) Employees of the company<br \/>\n(d) Members of the company.<br \/>\nAnswer:<br \/>\n(d) Members of the company.<br \/>\nThe audit report is the end product of every audit. It is the medium<br \/>\nthrough which an auditor expresses his opinion on the financial statements. It is a formal communication by the auditor to the shareholders throwing light on the state of affairs of the company. It is addressed to the members of the company and is considered at the AGM.<\/p>\n<p>52. Which of the following are the rights of a Statutory Auditor?<br \/>\nX. To receive remuneration<br \/>\nY. To attend Board of Director\u2019s meeting<br \/>\nZ. To attend the general meeting<br \/>\nW. To visit the branch office<br \/>\ncorrect option is &#8211;<br \/>\n(a) XandY<br \/>\n(b) X, Y and Z<br \/>\n(c) X, ZandW<br \/>\n(d) X, Y, Z and W.<br \/>\nAnswer:<br \/>\n(c) X, ZandW<br \/>\nA statutory auditor has the following rights<\/p>\n<ol>\n<li>access to books, accounts and vouchers.<\/li>\n<li>obtain information and explanation<\/li>\n<li>sign the audit report<\/li>\n<li>receive notice of and attend AGM and GM.<\/li>\n<li>visit branch office and access the books.<\/li>\n<li>receive remuneration.<\/li>\n<\/ol>\n<p>Thus, all options except y i.e. right to attend BOD\u2019s meeting is not a right of statutory auditor. Thus, the answer is X, Z and W.<\/p>\n<p>53. The form and basic contents of statutory audit report are &#8211;<br \/>\n(a) Provided in the Companies Act, 2013<br \/>\n(b) Provided in the Chartered Accountants Act, 1949<br \/>\n(c) Provided in the Code of Civil Procedure, 1908<br \/>\n(d) Not provided anywhere.<br \/>\nAnswer:<br \/>\n(a) Provided in the Companies Act, 2013<br \/>\nUnder Section 143(1) of the Companies Act, 2013, it is the duty of the auditor to make a report to the members of the company on the accounts examined by him.<br \/>\nSection 143(2) states that auditor\u2019s report must state the negative points noticed by him along with the reasons for the same.<br \/>\nUnder the relevant section, the CG is empowered to issue order requiring the auditor to include in his report a statement on such matters as may be specified.<br \/>\nThus, form and basic contents of statutory audit report are provided in the Companies Act, 2013.<\/p>\n<p>54. Duties of auditor are given in &#8211;<br \/>\n(a) 144<br \/>\n(b) 146<br \/>\n(c) 143<br \/>\n(d) 139<br \/>\nAnswer:<br \/>\n(c) 143<br \/>\nSection 143 of Companies Act talks about the duties of auditor.<\/p>\n<p>53. The first auditor holds the office till &#8211;<br \/>\n(a) Auditor dies<br \/>\n(b) Auditor retires<br \/>\n(c) Holding of 1st AGM<br \/>\n(d) Conclusion of 1st AGM.<br \/>\nAnswer:<br \/>\n(d) Conclusion of 1st AGM.<br \/>\nThe first auditor is appointed by the Board who holds the office till the conclusion of 1st AGM<\/p>\n<p>54. Which of the following is not mentioned in Audit Report?<br \/>\n(a) Whether HR practices are going right or wrong.<br \/>\n(b) Whether any Director is disqualified from appointment.<br \/>\n(c) Whether Balance Sheet gives true fair view.<br \/>\n(d) Whether he has obtained all the information and explanation required by him for the purpose of audit.<br \/>\nAnswer:<br \/>\n(a) Whether HR practices are going right or wrong.<br \/>\nIn the audit report, the auditor shall expressly state:<br \/>\n(a) Whether the accounts give the information as required by law.<br \/>\n(b) Whether the financial statements show a true and fair view.<br \/>\n(c) Whether proper books of account as required by law has been kept by the company.<br \/>\n(d) Whether financial statements comply with accounting standards.<br \/>\n(e) Whether any director has been disqualified from being acting as the director of the company. Thus option (a), whether HR practices are going on right or wrong are not mentioned in Audit Report.<\/p>\n<p>55. When does casual vacancy arises in.the office of the auditor?<br \/>\n(a) Arises due to resignation<br \/>\n(b) Arises due to death<br \/>\n(c) Arises due to disqualification<br \/>\n(d) All of the above.<br \/>\nAnswer:<br \/>\n(d) All of the above.<br \/>\nCasual vacancy means vacancy created by auditor ceasing to act<br \/>\nafter being validly appointed. It can occur on account of following reasons &#8211; resignation, death, disqualification, etc. Hence, all of the above are reasons for casual vacancy.<\/p>\n<p>56. A person who is indebted to the company for which amount cannot be appointed to set as an auditor of a company &#8211;<br \/>\n(a) As may be prescribed<br \/>\n(b) more than 1 Lac<br \/>\n(c) more than 3 Lac<br \/>\n(d) more than 5 Lac.<br \/>\nAnswer:<br \/>\n(d) more than 5 Lac.<br \/>\nA person who is indebted to the company in exempt of 5 lac cannot be appointed to act as an auditor.<\/p>\n<p>57. XYZ, a C.A. firm is an auditor of Lawan Pvt Ltd. X included Y as a partner in the firm. Then who will be the auditor?<br \/>\n(a) X<br \/>\n(b) Y<br \/>\n(c) Both X and Y<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(c) Both X and Y<br \/>\nA firm whereof all the partners are practicing Chartered Accountants can be appointed by its firm name as auditor in which case any partner may act in the name of the firm. As in the given question XYZ, a C.A. firm is an auditor of Laxman Pvt. Ltd. X included Y as a partner in the firm. So, Both X &amp; Y will be the auditors.<\/p>\n<p>58. If an individual partner of a C.A. firm is disqualified to be an auditor, then which of the following is correct?<br \/>\n(a) Whole firm will be disqualified<br \/>\n(b) Whole firm will not be disqualified<br \/>\n(c) Only that C.A. will be disqualified<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(a) Whole firm will be disqualified<br \/>\nIf an individual partner of a C.A. firm is disqualified to be an auditor, then whole firm will be disqualified under Section 141.<\/p>\n<p>59. Appointment of an auditor is done under which section of Companies Act, 2013?<br \/>\n(a) 139<br \/>\n(b) 142<br \/>\n(c) 137<br \/>\n(d) 140.<br \/>\nAnswer:<br \/>\n(a) 139<br \/>\nSection 139 of the Companies Act 2013 contains provisions regarding the appointment of the auditor.<\/p>\n<p>60. Under which Section of Companies Act, 2013, qualifications and disqualifications of an auditor are mentioned?<br \/>\n(a) 140<br \/>\n(b) 143<br \/>\n(c) 141<br \/>\n(d) 145.<br \/>\nAnswer:<br \/>\n(c) 141<br \/>\nThe qualifications and disqualifications of the auditor are mentioned under Section 141 of the Companies Act, 2013.&#8217;Section 141, of Companies Act, 2013, defines qualifications and disqualifications of the auditor are mentioned.<\/p>\n<p>61. A clean audit report is:<br \/>\n(a) A qualified audit report<br \/>\n(b) A modified audit report<br \/>\n(c) An unqualified audit report<br \/>\n(d) A audit report that has an adverse opinion.<br \/>\nAnswer:<br \/>\n(c) An unqualified audit report<br \/>\nA clean audit report is an unqualified audit report. This opinion signifies that the auditor accepts the accounting treatment given to the various transactions and the profit and loss account shows the true and fair view of the transaction entered by the organisation during the period and the balance sheet shows the true and fair view of the state of affairs of the organisation at that point of time.<\/p>\n<p>62. The retiring auditor can:<br \/>\n(i) Make written representations<br \/>\n(ii) Get his representation circulated<br \/>\n(iii) Be given an opportunity of being heard. The options are:<br \/>\n(a) I, II and III<br \/>\n(b) I and III<br \/>\n(c) I and II<br \/>\n(d) II and III<br \/>\nAnswer:<br \/>\n(a) I, II and III<br \/>\nThe retiring auditor can:<br \/>\nmake written representations.<br \/>\nget his representation circulated.<br \/>\nbe given an opportunity of being heard.<br \/>\nSo, the option (a) is correct answer.<\/p>\n<p>63. As per Companies Act, 2013, which of the following sections deal with qualifications of the audit?<br \/>\n(a) Section 226(3) and 226 (4)<br \/>\n(b) Section 141<br \/>\n(c) Section 224(1) and 224 (2)<br \/>\n(d) Section 224 (3) and 224.<br \/>\nAnswer:<br \/>\n(b) Section 141<br \/>\nSection 141(1) &amp; 141(2) deals with the qualifications of an auditor i.e.<br \/>\nOnly a CA (individual) or a firm where majority of partners practicing in India are CA can be appointed as auditor.<br \/>\nWhere a firm including an LLP is appointed as an auditor, only the partners who are CA shall be authorized to act and sign on behalf of the firm.<\/p>\n<p>64. Under which Section of Companies Act, 2013, the auditor has a duty to sign audit report:<br \/>\n(a) Section 227 (4A)<br \/>\n(b) Section 227 (3)<br \/>\n(c) Section 227 (2)<br \/>\n(d) Section 145<br \/>\nAnswer:<br \/>\n(d) Section 145<br \/>\nSec. 145 of the Companies Act, 2013, the auditor has a duty to sign audit report and other documents. Auditor shall be punishable with fine which shall not be less than \u20b9 25,000 but which may extend to \u20b9 5,00,000.<\/p>\n<p>65. The auditor has a right to:<br \/>\n(a) To direct the officers of the company<br \/>\n(b) Retain the books of accounts<br \/>\n(c) Attend all the board meetings<br \/>\n(d) Access the books of Accounts and vouchers of the company.<br \/>\nAnswer:<br \/>\n(d) Access the books of Accounts and vouchers of the company.<br \/>\nRights of the auditors under Companies Act are as follows:<br \/>\n(i) Right to access to books, accounts and vouchers<br \/>\n(ii) Right to obtain information and explanation<br \/>\n(iii) Right to sign audit report<br \/>\n(iv) Right to receive notice and attend General Meeting<br \/>\n(v) Right to receive remuneration.<\/p>\n<p>66. Which of the following may be appointed as the first auditor of the company\u20b9 (i) A Chartered Accountant in practice (ii) A firm of Chartered Accountants in practice (iii) A limited liability partnership of Chartered Accountants in practice. The options are:<br \/>\n(a) I, II and III<br \/>\n(b) I and III<br \/>\n(c) II and III<br \/>\n(d) I and II.<br \/>\nAnswer:<br \/>\n(a) I, II and III<br \/>\nChartered Accountant in practice is appointed as first auditor of the company or a firm of Chartered Accountants in practice.<\/p>\n<p>67. In which section of Companies Act, 2013, the provisions relating to an auditor\u2019s remuneration is covered?<br \/>\n(a) Section 140<br \/>\n(b) Section 141<br \/>\n(c) Section 142<br \/>\n(d) Section 139.<br \/>\nAnswer:<br \/>\n(b) Section 141<br \/>\nSection 141 states provision relating to remuneration of auditor for auditing accounts of the company.<\/p>\n<p>68. Who will be responsible for errors in report if external auditor relies on the work of internal auditor?<br \/>\n(a) External auditor<br \/>\n(b) Internal auditor<br \/>\n(c) Management<br \/>\n(d) Shareholder.<br \/>\nAnswer:<br \/>\n(a) External auditor<br \/>\nStatutory auditor has to review the work done by internal auditor to determine the extent of reliance they can place on them. Auditors cannot completely \/ely on internal audit, they are responsible if there are any errors in report, if it is made by being fully dependent on internal audit.<\/p>\n<p>69. What is the qualification of an auditor:<br \/>\n(a) CA<br \/>\n(b) CS<br \/>\n(c) CMA<br \/>\n(d) Key managerial person of the Company<br \/>\nAnswer:<br \/>\n(a) CA<br \/>\nSection 141 contains that a person shall be eligible for appointment<br \/>\nas an auditor of a company only if he is a Chartered Accountant.<\/p>\n<p>70. Rights of auditor:<br \/>\n(a) Notice of AGM<br \/>\n(b) Notice of Board Meeting<br \/>\n(c) Right to have remuneration<br \/>\n(d) Both (a) &amp; (c)<br \/>\nAnswer:<br \/>\n(d) Both (a) &amp; (c)<br \/>\nRights of an auditor:<br \/>\n(i) Right to access to books, accounts and vouchers<br \/>\n(ii) Right to obtain information and explanation<br \/>\n(iii) Right to sign the audit report<br \/>\n(iv) Right to receive notice and attend general meeting<br \/>\n(v) Right to receive remuneration<br \/>\n(vi) Right to visit Branch Office and right of access to books.<\/p>\n<p>71. Disqualification of auditor:<br \/>\n(a) A body corporate other than LLP Act 2008<br \/>\n(b) Employee of company<br \/>\n(c) Relative of a director<br \/>\n(d) All of the above<br \/>\nAnswer:<br \/>\n(d) All of the above<br \/>\nDisqualification of an Auditor:<br \/>\n(i) A body corporate except LLP registered under Limited Liability Partnership Act, 2008.<br \/>\n(ii) An officer of employer of the Company<br \/>\n(iii) Any person who is a partner, or who is in the employment, of an officer or employee of the company<br \/>\n(iv) Relative of a director or who is in employment of the company ] as director or KMP.<br \/>\n(v) A person who himself or his relative or partner<br \/>\n(a) is holding any security or interest in the company in excess of \u20b9 1 Lac<br \/>\n(b) is indebted to the company or its subsidiary, holding or associate company or a subsidiary of such holding company in excess of \u20b9 5 lacs.<br \/>\nThus, all options are correct. Thus, the answer is option (d).<\/p>\n<p>72. If an auditor is not in a position to give an opinion then it is:<br \/>\n(a) Unqualified opinion<br \/>\n(b) Adverse or negative opinion<br \/>\n(c) Qualified opinion<br \/>\n(d) Disclaimer of opinion<br \/>\nAnswer:<br \/>\n(d) Disclaimer of opinion<br \/>\nDisclaimer of opinion is a situation when auditor is not in a position to give his opinion. Where auditor is not in a position to collect sufficient appropriate audit evidence which enables him to draw his conclusion then it is proper for the auditor to disclaim an opinion due! to lack of sufficient appropriate audit evidence.<\/p>\n<p>73. The first auditor of a company shall be appointed by _________ within 30 days from the date of registration of the company.<br \/>\n(a) Creditor of the company<br \/>\n(b) Board of Director<br \/>\n(c) Member of the company<br \/>\n(d) The Central Government.<br \/>\nAnswer:<br \/>\n(b) Board of Director<br \/>\nSec. 139(6) of the Companies Act, 2013 provides that the first auditor are to be appointed by the Board of Directors within 30 days from the date of registration of the company. He shall hold office till the conclusion of first AGM.<\/p>\n<p>74. Which of the following are the rights of a statutory auditor?<br \/>\n(X) To receive remuneration<br \/>\n(Y) To attend board of directors meeting<br \/>\n(Z) To attend the general meeting<br \/>\n(W) To visit the branch office<br \/>\n(a) X, Y, Z and W<br \/>\n(b) X and Y<br \/>\n(c) X, ZandW<br \/>\n(d) X, YandZ<br \/>\nAnswer:<br \/>\n(c) X, ZandW<br \/>\nAs per Sec. 143 (1) of the Companies Act, 2013 every statutory auditor has a right to receive remuneration, to receive notice of or attend general meeting, to visit the branch office and access to the books.<\/p>\n<p>75. Which of the following may be appointed as the first auditor of company?<br \/>\n(I) A Chartered Accountant in practice<br \/>\n(II) A firm of Chartered Accountant in practice<br \/>\n(III) A limited liability partnership of Chartered Accountant in practice.<br \/>\n(a) (I) and (III)<br \/>\n(b) (I), (II) and (III)<br \/>\n(c) (I) and (II)<br \/>\n(d) (I) and (III)<br \/>\nAnswer:<br \/>\n(b) (I), (II) and (III)<br \/>\nSec. 141(1) and Sec. 141(2) of Companies Act, 2013 contains provisions as regards to qualification of auditors. A Chartered Accountant in practice, a firm whereof majority of partners are qualified for or are CA in practice including LLP is appointed as an auditor of a company.<\/p>\n<p>76. A negative audit report is:<br \/>\n(a) A qualified audit report<br \/>\n(b) A modified audit report<br \/>\n(c) An audit report that has an adverse opinion<br \/>\n(d) An unqualified audit report.<br \/>\nAnswer:<br \/>\n(c) An audit report that has an adverse opinion<br \/>\nWhere as a result of the examination of books of accounts, the auditor concludes that he does not agree with the true and fair view of financial statement under audit, he express adverse opinion or negative opinion.<\/p>\n<p>77. In the course of audit the auditor observed that loans and advances made by the company have been shown as deposits. The auditor will:<br \/>\n(a) Report it to SEBI<br \/>\n(b) State this in his audit report<br \/>\n(c) Not state this in his audit report<br \/>\n(d) Report it to the Central Government.<br \/>\nAnswer:<br \/>\n(b) State this in his audit report<br \/>\nThe Auditor, will have to state his observation in his audit report that the loans and advances made by the company have been wrongly shown as deposits.<\/p>\n<p>78. Which of the following is not disqualified for appointment as auditor of \u201ca\u201d Co.?<br \/>\n(a) An employee of the company<br \/>\n(b) A person whose relative is a director of the company<br \/>\n(c) A limited liability partnership firm<br \/>\n(d) A body corporate other than LLP.<br \/>\nAnswer:<br \/>\n(c) A limited liability partnership firm<br \/>\nSec. 141(1) and 141(2) of the Companies Act. 2013 contains provisions stating hrm including LLP is appointed as an auditor of a company, only the partners who are Chartered Accountants shall be authorised to act and sign on behalf of a firm.<\/p>\n<p>79. Which of the following is not a type of audit opinion?<br \/>\n(a) Reserve<br \/>\n(b) Disclaimer<br \/>\n(c) Adverse<br \/>\n(d) Qualified<br \/>\nAnswer:<br \/>\n(a) Reserve<br \/>\nTypes of Auditor\u2019s opinion:<br \/>\n(a) Unqualified opinion: Where auditor does not have any reservation, objection regarding the information under audit then he issues an unqualified opinion. It is also known as clean report.<br \/>\n(b) Adverse opinion: Where auditor does not agree with the true and fair view of Financial Statement. He express adverse opinion.<br \/>\n(c) Qualified opinion: When auditor has some reservation which though significant but not that much so as to give an adverse opinion. In that case, Auditor gives a qualified opinion.<br \/>\n(d) Disclaimer of opinion: It is a situation when auditor is not in position to collect sufficient and appropriate audit evidence, then he expresses a disclaimer of opinion.<\/p>\n<p>80. Which of the following may be appointed as first auditor of Company (1)A Chartered Accountant in practice (2) A firm of Chartered Accountants in practice (3) A Limited Liability Partnership of Chartered Accountants in practice<br \/>\n(a) 1 and 2<br \/>\n(b) 1,2 and 3<br \/>\n(c) 2 and 3<br \/>\n(d) 1 and 3<br \/>\nAnswer:<br \/>\n(b) 1,2 and 3<br \/>\nAs per Sec. 141 (1) of Companies Act, 2013:<br \/>\n(a) A person shall be eligible for appointment as auditor of company only if he is a Chartered Accountant in practice<br \/>\n(b) A firm where majority of partners are Chartered Accountant in practice<br \/>\n(c) A Limited Liability partnership of Chartered Accountant in practice<\/p>\n<p>81. Which account will be credited for the excess money received on share application that is to be adjusted against allotment\u20b9<br \/>\n(a) Share allotment A\/c<br \/>\n(b) Share First Call A\/c<br \/>\n(c) Share Capital A\/c<br \/>\n(d) Share application A\/c<br \/>\nAnswer:<br \/>\n(d) Share application A\/c<br \/>\nThe Journal Entry for money received on Application is<br \/>\nBank A\/c Dr.<br \/>\nTo Share Application A\/c<br \/>\nThe Amount received in excess is first credited to Share Application A\/c and then it is transferred to Share Allotment A\/c at the time of adjustment.<\/p>\n<p>82. Which of the following is disqualified for appointment as auditor of a Company?<br \/>\n(a) A limited liability partnership<br \/>\n(b) An officer or Employee of the Company.<br \/>\n(c) A Chartered Accountant holding a Certificate of Practice.<br \/>\n(d) A firm of Chartered Accountants<br \/>\nAnswer:<br \/>\n(b) An officer or Employee of the Company.<br \/>\nAs per Sec. 141(3) of the Companies Act, 2013 following person shall not be eligible for appointment as auditor.<br \/>\n(a) A body corporate other than LLP of Chartered Accountant<br \/>\n(b) An officer or employee of company.<br \/>\n(c) A person who is a partner.<br \/>\n(d) A person who or his relative<br \/>\n(i) is holding security of face value more than \u20b9 1 lakh.<br \/>\n(ii) is indebted with a debt of more than \u20b9 5 lakhs.<br \/>\n(iii) has given guarantee in debt of \u20b9 1 lakh or more.<br \/>\n(e) A person who has business relationship with the company.<br \/>\n(f) A person whose relative is director.<br \/>\n(g) A person who is afthe time of appointment or reappointment is auditor of more than 20 companies.<br \/>\n(h) A person who has been convicted and a period of 10 years has not elapsed.<br \/>\n(i) A person whose subsidiary or associate company is engaged in providing any service under section 144.<\/p>\n<p>83. The audit report of the statutory auditor shall report on the: (i) Books of accounts examined by him (ii) Balance Sheet of the company (iii) Profit and loss account of the Company (iv) Direction report of the Company. The options are:<br \/>\n(a) I,II, III and IV<br \/>\n(b) I,II and IV<br \/>\n(c) I,II, and III<br \/>\n(d) II,III and IV<br \/>\nAnswer:<br \/>\n(c) I,II, and III<br \/>\n(c) The auditor&#8217;s report shall also state under section 143(3) of the Companies Act, 2013:<br \/>\n(a) Information and explanation obtained for the purpose of audit.<br \/>\n(b) Proper books of account as required by law have been kept or not.<br \/>\n(c) Report on accounts of Branch office audited by other person.<br \/>\n(d) Financial statement are in agreement with books.<br \/>\n(e) Financial Statement comply with accounting standards.<br \/>\n(f) Any observation or comment of auditor on financial transaction or matter.<br \/>\n(g) Any director being disqualified under section164 (2).<br \/>\n(h) Any qualification, reservation or adverse mark on maintenance of account.<br \/>\n(i) Whether company has adequate internal financial control or not<\/p>\n<p>84. Which of the following are the rights of a Statutory Auditor\u20b9 (X) To receive remuneration (Y) To attend Board of Direction\u2019s meeting (Z) To attend the general meeting (W) To visit the branch office.<br \/>\nThe Correct opinion is:<br \/>\n(a) X, Z and W<br \/>\n(b) X, Y, Z and W<br \/>\n(c) X and Y<br \/>\n(d) X, Y and Z<br \/>\nAnswer:<br \/>\n(a) X, Z and W<br \/>\nAs per Sec. 143(1), The rights and power enjoyed by auditor are:<br \/>\n(a) Right to access books, accounts and vouchers<br \/>\n(b) Right to obtain Information and explanation<br \/>\n(c) Right to sign the Audit Report<br \/>\n(d) Right to Receive Notice of and Attend General Meeting<br \/>\n(e) Right to Visit Branch Office and access books of accounts.<\/p>\n<p>85. Audit report is prepared by<br \/>\n(a) Auditor<br \/>\n(b) Assistants of auditor<br \/>\n(c) Both<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(a) Auditor<br \/>\nThe auditor\u2019s report is a formal opinion, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or evaluation performed on an organisation. The auditor should review and assess whether the financial statements have been prepared in accordance with an acceptable financial reporting framework applicable to the entity under audit. It is also necessary to consider whether the financial statements comply with the relevant statutory requirements and then the audit report is prepared. The report is subsequently provided to the stakeholders such as shareholders, creditors, financial institutions, banks, government, or the general public at large as an assurance service so that the user can make decisions based on the results of the audit.<\/p>\n<p>86. What is a negative report?<br \/>\n(a) Qualified report<br \/>\n(b) Unqualified report<br \/>\n(c) Adverse opinion report<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(c) Adverse opinion report<br \/>\nIf any of the matters required to be included in the audit report is answered in the negative or with a qualification, the report shall also state the reasons for the same. An adverse opinion is expressed when the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.<\/p>\n<p>87. Appointment of auditor is given in section _________ of Companies Act 2013.<br \/>\n(a) 139(6)<br \/>\n(b) 143<br \/>\n(c) 144<br \/>\n(d) 126<br \/>\nAnswer:<br \/>\n(a) 139(6)<br \/>\nAs per Companies Act, 2013 the auditors of the company are appointed as per the provisions provided in section 139(6) of the act. Hence, we can say that Statutory Audit is also a financial audit as the objectives are same.<\/p>\n<p>88. Auditor\u2019s report is to be laid before the company _________ meetings.<br \/>\n(a) AGM<br \/>\n(b) EGM<br \/>\n(c) Board meeting<br \/>\n(d) All of the above<br \/>\nAnswer:<br \/>\n(a) AGM<br \/>\nAuditor&#8217;s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company. Thus auditor report is laid before the company in the annual general meetings.<\/p>\n<p>89. First auditor is to be appointed by _________<br \/>\n(a) Shareholders<br \/>\n(b) Members<br \/>\n(c) Board of Directors<br \/>\n(d) CA<br \/>\nAnswer:<br \/>\n(c) Board of Directors<br \/>\nThe Board of Directors of a company shall appoint an individual or firm as the first auditor of a company, other than a Government company, within thirty days from the date of registration of the company. In the case of failure of the Board to appoint the first auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.<\/p>\n<p>90. When auditor does not have any reservation, objective regarding the information under audit, then he gives-<br \/>\n(a) Unqualified opinion<br \/>\n(b) Negative opinion<br \/>\n(c) Positive opinion<br \/>\n(d) Qualified opinion<br \/>\nAnswer:<br \/>\n(a) Unqualified opinion<br \/>\nAn unqualified opinion is expressed when the auditor concludes that the financial statements give a true and fair view in accordance with the financial reporting framework used for the preparation and presentation of the financial statements. An unqualified opinion indicates, implicitly, that any changes in the accounting principles or in the method of their application, and the effects thereof, have been properly determined and disclosed in the financial statements. Thus option A is correct.<\/p>\n<p>91. The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?<br \/>\n(a) Adverse opinion.<br \/>\n(b) Disclaimer of opinion<br \/>\n(c) Qualified opinion<br \/>\n(d) Unqualified opinion<br \/>\nAnswer:<br \/>\n(c) Qualified opinion<br \/>\n(c) In a situation where neither the unqualified, nor adverse opinion is appropriate, the auditor gives the qualified opinion. This is a situation where the auditor has some reservation about the financial statements which though significant but not that significant so as to \u20b9 warrant adverse opinion and auditor agrees to a large extent with the true &amp; fair view of the financial statement that he gives a qualified opinion. In the given case, there is a change in accounting principle or , account of change in method of depreciation which the company has disclosed as notes in the financial statements. Moreover, it has an immaterial effect on the current year\u2019s financial statements. Thus, the auditor will issue a qualified opinion.<\/p>\n<p>92. Which of the following may be appointed as the first auditor of company\u20b9 (I) A Chartered Accountant in practice (II) A firm of Chartered Accountants in practice (III) A Limited Liability Partnership of Chartered Accountants in practice. The options are:<br \/>\n(a) I, II and III<br \/>\n(b) II and III<br \/>\n(c) I and III<br \/>\n(d) I and II<br \/>\nAnswer:<br \/>\n(a) I, II and III<br \/>\nFollowing may be appointed as auditor:<br \/>\n(a) A Chartered Accountant in practice<br \/>\n(b) A Firm of Chartered Accountant in practice<br \/>\n(c) An LLP of Chartered Accountant in practice<\/p>\n<p>93. In the course of audit, the auditor observed that loans and advances made by the company have been shown as deposits. The auditor will:<br \/>\n(a) State this in his audit report<br \/>\n(b) Report it to Central Government<br \/>\n(c) Not state this in his report<br \/>\n(d) Report it to SEBI<br \/>\nAnswer:<br \/>\n(a) State this in his audit report<br \/>\nAuditor shall state all the relevant matter in this report and he should also state this matter in his report.<\/p>\n<p>94. Which of the following is not disqualified for appointment as auditor of a company\u20b9<br \/>\n(a) A limited liability partnership firm.<br \/>\n(b) A person whose relative is a director in the company.<br \/>\n(c) An employee of the company.<br \/>\n(d) A Body corporate other than LLP.<br \/>\nAnswer:<br \/>\n(a) A limited liability partnership firm.<br \/>\nAs per Companies Act, 2013 an LLP of Chartered Accountant in practice shall not be disqualified for being appointed as auditor.<\/p>\n<p>95. Disclaimer of Opinion means:<br \/>\n(a) The auditor gives clean report<br \/>\n(b) The auditor gives qualified report<br \/>\n(c) The auditor is unable to express his opinion<br \/>\n(d) The auditor gives adverse report.<br \/>\nAnswer:<br \/>\n(c) The auditor is unable to express his opinion<br \/>\nDisclaimer of Opinion mean the auditor is unable to form an opinion.<\/p>\n<p>96. Which of the following are the rights of a statutory auditor (X) To receive remuneration (Y) To attend Board of Directors meeting (Z) To attend the general meeting (W) To visit the branch office. The correct option is:<br \/>\n(a) X, Y and Z<br \/>\n(b) X, Z and W<br \/>\n(c) XandY<br \/>\n(d) X, Y, Z and W<br \/>\nAnswer:<br \/>\n(b) X, Z and W<br \/>\nRights of Statutory Auditor:<br \/>\n(a) To receive Remuneration<br \/>\n(b) To attend General Meeting either by himself or by proxy<br \/>\n(c) To visit branch office.<\/p>\n<p>97. The board of directors shall appoint first auditor of a company:<br \/>\n(a) within one month of completion of capital subscription by the company .<br \/>\n(b) within one month of the promotion of the company<br \/>\n(c) within one month of the commencement of the business of the company<br \/>\n(d) within one month of incorporation of the company<br \/>\nAnswer:<br \/>\n(d) within one month of incorporation of the company<br \/>\nBoard of Directors shall appoint as first auditor of the company within 30 days or one month after the registration of company. The first auditor shall be ratified by company at the first annual general meeting. Board of Directors shall be appointed as first auditor in Government Companies within 60 days after registration of company.<\/p>\n<p>98. The client changed method of depreciation from straight line to written down value method. This has been disclosed as a note to the financial statements. It has an immaterial effect on the current financial statements. It is expected, however, that the change will have a significant effect on future periods. Which of the following option should the auditor express?<br \/>\n(a) Unqualified opinion<br \/>\n(b) Qualified opinion<br \/>\n(c) Disclaimer of opinion<br \/>\n(d) Adverse opinion<br \/>\nAnswer:<br \/>\n(b) Qualified opinion<br \/>\nQualified opinion is an opinion which is given by the auditor to show the audit report clean if audit report of firm is not clean. In this question, if is not clear that what effect has been drawn after changing depreciation method from straight line to written down value method. So, Auditor give qualified opinion to show that audit report is clean.<\/p>\n<p>99. If a casual vacancy in the office of Auditor arises by his resignation, it should only be filled by the company in a:<br \/>\n(a) Board meeting<br \/>\n(b) General meeting<br \/>\n(c) Annual general meeting<br \/>\n(d) Statutory meeting<br \/>\nAnswer:<br \/>\n(b) General meeting<br \/>\nIf there is a vacancy arises of auditor by his resignation then it is only filled by company in a General Meeting to appoint new auditor or old auditor by solving his problem with company.<\/p>\n<p>100. Duties of auditor are given in :<br \/>\n(a) Section 144<br \/>\n(b) Section 146<br \/>\n(c) Section 143<br \/>\n(d) Section 139<br \/>\nAnswer:<br \/>\n(c) Section 143<br \/>\n(c) The Auditor of an organisation may also have specific statutory dulies and powers under the act governing suck organisation. In case of a company Auditor, its duties and powers are defined under Companies Act, 2013 under Section 143.<\/p>\n<p>101. An auditor expresses when he has no reservations<br \/>\n(a) Unqualified opinion<br \/>\n(b) Disclaimer of opinion<br \/>\n(c) Adverse opinion<br \/>\n(d) Can\u2019t say<br \/>\nAnswer:<br \/>\n(a) Unqualified opinion<br \/>\nIf an auditor expressed that every estimates and matter disclosed in audit report is adequate and in accordance to financial reporting framework; it is unqualified opinion. Hence, option (a) is correct<\/p>\n<p>102. Who is not qualified for doing Audit (financial).<br \/>\n(a) Practicing Chartered Accountant<br \/>\n(b) Practicing Company Secretary<br \/>\n(c) Practicing Cost Accountant<br \/>\n(d) (b) and (c) both.<br \/>\nAnswer:<br \/>\n(d) (b) and (c) both.<br \/>\nDisqualification of an Auditor: Except of Practicing Chartered Account and in case of LLP as auditor an audit is done by a Chartered Accountant of a firm; every person is disqualified for Audit (financial). Thus, option (d) is correct.<\/p>\n<p>103. For which companies it is compulsory to do secretarial audit?<br \/>\n(a) Every listed company<br \/>\n(b) Every public company having a paid-up capital of \u20b9 50 cr. or more<br \/>\n(c) Private company which is a subsidiary of a public company<br \/>\n(d) All of the above.<br \/>\nAnswer:<br \/>\n(d) All of the above.<br \/>\nMandatory Secretarial Audit:<br \/>\n(i) Every listed company<br \/>\n(ii) Every Public listed company, having paid up capital of \u20b9 50 crore or more<br \/>\n(iii) Every Private company is a subsidiary of a public company etc. Thus, option (d) is correct.<\/p>\n<p>104. An Auditor is a:<br \/>\n(a) A practicing Company Secretary<br \/>\n(b) A practicing Chartered Accountant<br \/>\n(c) A Cost and Management Accountant<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(b) A practicing Chartered Accountant<br \/>\nAn Auditor is a Practicing Chartered Accountant. Option (b) is correct.<\/p>\n<p>105. Who will be member of IBC 2016 as a Insolvency resolution professional?<br \/>\n(a) Practicing Company Secretary<br \/>\n(b) Practicing Chartered Accountant .<br \/>\n(c) Practicing Cost and Management Accountant<br \/>\n(d) All of the above.<br \/>\nAnswer:<br \/>\n(d) All of the above.<br \/>\nThe member of insolvency resolution professional are :<br \/>\n(i) Practicing Company Secretary<br \/>\n(ii) Practicing Chartered Accountant<br \/>\n(iii) Practicing Cost and Management Accountant<\/p>\n<p>106. Statutory audit report of a company is addressed to:<br \/>\n(a) Board of Directors<br \/>\n(b) Ministry of Corporate Affairs<br \/>\n(c) Employees of the company<br \/>\n(d) Members of the company<br \/>\nAnswer:<br \/>\n(d) Members of the company<br \/>\n(d) Statutory audit report of a company is addressed to the members of the Company.<\/p>\n<p>107. The form and basic contents of statutory audit report are:<br \/>\n(a) Provided in the Companies Act, 2013<br \/>\n(b) Provided in the Chartered Accountants Act, 1949<br \/>\n(c) Provided in the Code of Civil Procedure, 1908<br \/>\n(d) Not provided any where<br \/>\nAnswer:<br \/>\n(a) Provided in the Companies Act, 2013<br \/>\nThe format and basic contentb of statutory audit report are contained in Companies Act, 2013.<\/p>\n<p>108. Which of the following is necessarily to be included in an auditor\u2019s report:<br \/>\n(a) Whether the company has followed best HR practices in recruitment of employees<br \/>\n(b) Whether fhe company is an equal opportunities employer<br \/>\n(c) Whether the company has taken any loan from its directors<br \/>\n(d) Whether any director is disqualified from being appointed under Section 164g Companies Act, 2013.<br \/>\nAnswer:<br \/>\n(d) Whether any director is disqualified from being appointed under Section 164g Companies Act, 2013.<br \/>\nThe fact whether any director is disqualified from appointment u\/s 164g of Companies Act, 2013 should necessarily be mentioned in auditor report.<\/p>\n<p>109. \u2018Disclaimer of Opinion\u2019 means:<br \/>\n(a) The auditor gives clean report<br \/>\n(b) The auditor gives qualified report<br \/>\n(c) The auditor gives adverse report<br \/>\n(d) The auditor is unable to expresses his opinion.<br \/>\nAnswer:<br \/>\n(d) The auditor is unable to expresses his opinion.<br \/>\nA disclaimer of opinion is expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate evidence and is therefore, unable to express an opinion on financial Statements.<\/p>\n<p>110. The controller and Auditor General of India in respect of _________ shall appoint an auditor within a period of _________<br \/>\n(a) Calendar year, 180 days<br \/>\n(b) Financial year, 180 days<br \/>\n(c) Financial year, 182 days<br \/>\n(d) Calendar year, 90 days<br \/>\nAnswer:<br \/>\n(b) Financial year, 180 days<br \/>\nIn the case of Subsequent Auditor of Government Companies, the Comptroller and Auditor General of India in respect of a financial year shall appoint an auditor within a period of 180 days from the commencement of the financial year.<br \/>\nHence option \u2018c\u2019 is correct.<\/p>\n<p>111. The Comptroller and Auditor-General of India shall appoint the first auditor of the Government Company within _________ from the date of registration of the company.<br \/>\n(a) sixty days<br \/>\n(b) sixty weeks<br \/>\n(c) six months<br \/>\n(d) six days<br \/>\nAnswer:<br \/>\n(a) sixty days<br \/>\nThe Comptroller and Auditor-General of India shall appoint the first auditor of the Government Company within sixty days from the date of registration of the company.<\/p>\n<p>112. Is it the duty of auditor whether personal expenses have been charged to revenue account.<br \/>\n(a) False<br \/>\n(b) True<br \/>\n(c) Can\u2019t say<br \/>\n(d) Partly True and Partly False<br \/>\nAnswer:<br \/>\n(b) True<br \/>\nAccording to section 143(1), powers and duties of auditors, it is the duity of the auditor to see wheather the personal expenses have been charged to revenue accounts.<br \/>\nHence option \u2018b\u2019 is correct.<\/p>\n<p>113. As per Companies Act, 2013 matters to be included in auditor\u2019s report<br \/>\n(a) Fixed and Non Fixed Assets<br \/>\n(b) Fixed Assets<br \/>\n(c) Both (a) and (b)<br \/>\n(d) None of those<br \/>\nAnswer:<br \/>\n(c) Both (a) and (b)<br \/>\nAccording to section 143(2) the auditor\u2019s power Report also includes.<br \/>\n(i) Fixed assets<br \/>\n(ii) Inventory<br \/>\n(iii) Granting of loans to certain parties<br \/>\n(iv) Internal control system etc.<\/p>\n<p>114. The secretarial auditor shall submit his report in _________ form<br \/>\n(a) MR-3<br \/>\n(b) MR-2<br \/>\n(c) MR-1<br \/>\n(d) None of above<br \/>\nAnswer:<br \/>\n(a) MR-3<br \/>\nThe board is required to provide explanation in the Board\u2019s report to every qualification, observation or other adverse remark made by company secretary in his report. The Secretarial Auditors will submit his report in Form MR-3.<\/p>\n<p>115. Which of the following is (are) case of casual vacancy<br \/>\n(i) Resignation due to family issues<br \/>\n(ii) Any disqualification as per sec. 141 (3)<br \/>\n(iii) Any quarrels with management<br \/>\n(iv) Any issue regarding remuneration<br \/>\n(a) Only I<br \/>\n(b) II &amp; III<br \/>\n(c) II,III,IV<br \/>\n(d) I, II, III,<br \/>\nAnswer:<br \/>\n(c) II,III,IV<br \/>\nCausal vacancy of the auditor means a vacancy caused due to death, disqualification as per section 141(3), resignation of an auditor only.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Go through this Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions \u2013 CS Foundation Fundamentals of Accounting and Auditing Notes\u00a0will help students in revising the entire subject quickly. Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions &#8211; CS Foundation Fundamentals of Auditing Notes Auditor &#8211; an introduction: A person who conducts &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/gstguntur.com\/audit-and-auditors-under-companies-act-2013-basic-provisions-cs-foundation-fundamentals-of-auditing-notes\/\"> <span class=\"screen-reader-text\">Audit and Auditors Under Companies Act, 2013 &#8211; Basic Provisions &#8211; CS Foundation Fundamentals of Auditing Notes<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[159],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/8613"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=8613"}],"version-history":[{"count":10,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/8613\/revisions"}],"predecessor-version":[{"id":8630,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/8613\/revisions\/8630"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=8613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=8613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=8613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}