Match List I with List II: List- I List – II A. (I) B. (II) C. (III) D. (IV)Appointment of auditors by CAG Section 139 (5) Qualifications and disqualifications of auditors Section 141 Powers-and duties of auditors Section 142 Remuneration of auditors Section 143
Choose the correct answer from the options given below -
Understanding Auditor Provisions in the Companies Act, 2013
The question asks us to match specific aspects related to company auditors with the relevant sections of the Companies Act, 2013. This requires knowledge of the key provisions governing the appointment, qualifications, powers, duties, and remuneration of auditors under the Act.
Key Sections of the Companies Act, 2013 related to Auditors
Let's look at the topics covered by the sections mentioned in List II:
- Section 139: This section deals with the appointment of auditors. Various sub-sections cover different scenarios, including the appointment by the Board of Directors, members, and specifically by the Comptroller and Auditor General of India (CAG) for government companies. Section 139(5) relates to the appointment of the first auditor in a government company by the CAG.
- Section 141: This section specifies the qualifications and disqualifications for the appointment of an auditor. It lists conditions under which a person is eligible or ineligible to be appointed as an auditor.
- Section 142: This section deals with the remuneration of the auditor. It specifies how the auditor's fees and expenses are to be fixed.
- Section 143: This section outlines the powers and duties of the auditor and also covers the auditing standards to be followed. It details the auditor's rights of access to books and vouchers, their duty to report to the members, and other related matters.
Matching List I with List II
Now, let's match the items from List I with the correct sections from List II based on the above understanding:
| List I (Topic) | List II (Section of Companies Act, 2013) | Match |
|---|---|---|
| A. Appointment of auditors by CAG | I. Section 139 (5) | A - I |
| B. Qualifications and disqualifications of auditors | II. Section 141 | B - II |
| C. Powers and duties of auditors | IV. Section 143 | C - IV |
| D. Remuneration of auditors | III. Section 142 | D - III |
Explanation of the Matches
Let's detail each correct match:
- A. Appointment of auditors by CAG – (I) Section 139 (5): Section 139 of the Companies Act, 2013, deals with the appointment of auditors. Specifically, sub-section (5) states that the Comptroller and Auditor General of India (CAG) shall, in respect of a Government company, appoint the first auditor within 60 days of incorporation. Subsequent auditors are also appointed by the CAG under Section 139(7). Thus, the appointment of auditors by CAG is covered under Section 139, particularly Section 139(5) as listed.
- B. Qualifications and disqualifications of auditors – (II) Section 141: Section 141 of the Companies Act, 2013, is specifically titled "Qualifications and disqualifications of auditors". It lists the criteria an individual or firm must meet to be eligible for appointment as an auditor and the circumstances under which they would be disqualified.
- C. Powers and duties of auditors – (IV) Section 143: Section 143 of the Companies Act, 2013, is comprehensive regarding the "Powers and duties of auditors and auditing standards". It grants auditors rights such as access to company records and the duty to report to the members on the accounts examined by them.
- D. Remuneration of auditors – (III) Section 142: Section 142 of the Companies Act, 2013, is dedicated to the "Remuneration of auditors". It specifies how the remuneration of the auditor shall be fixed, which is typically done by the company in a general meeting or as determined by the Board or CAG depending on the appointing authority.
Based on this analysis, the correct mapping is A - (I), B - (II), C - (IV), D - (III).
Revision Table: Companies Act Auditor Sections
| Topic | Relevant Section(s) in Companies Act, 2013 |
|---|---|
| Appointment of Auditors (General) | Section 139 |
| Appointment of First Auditor (Govt. Company) | Section 139 (5) |
| Appointment of Subsequent Auditor (Govt. Company) | Section 139 (7) |
| Qualifications & Disqualifications of Auditors | Section 141 |
| Remuneration of Auditors | Section 142 |
| Powers & Duties of Auditors, Auditing Standards | Section 143 |
Additional Information on Company Auditors and Companies Act
Auditors play a crucial role in ensuring the financial health and transparency of a company. The Companies Act, 2013, provides a detailed framework for their appointment, removal, rights, and responsibilities. Here are some related points:
- Role of CAG: The Comptroller and Auditor General of India (CAG) is involved in appointing auditors for government companies and also has the power to conduct a supplementary audit or test audit of such companies under Section 143(6) and Section 143(7).
- Types of Auditors: Companies usually appoint statutory auditors to audit their annual financial statements. Internal auditors may also be appointed under Section 138 for internal control assessment.
- Auditor's Report: A significant duty of the auditor under Section 143 is to prepare a report on the company's accounts examined by them. This report is addressed to the members and is attached to the financial statements. It expresses an opinion on whether the financial statements give a true and fair view and comply with accounting standards.
- Removal and Resignation: The Companies Act also contains provisions regarding the removal of auditors before the expiry of their term (Section 140) and rules for auditor resignation.
- Auditing Standards: Section 143(9) mandates that auditors must comply with the auditing standards notified by the Central Government in consultation with the National Financial Reporting Authority (NFRA).
Important Questions from The Companies Act, 2013
Which one of the following nature of business is suitable to a Dormant company?
Which of the following companies do not fall under a purview of Dormant company?
(A) Private company
(B) One person company
(C) Limited and unlimited liability companies
(D) Public company
(E) Government company
Choose the most appropriate answer from the options given below:
Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R.
Assertion (A): Provision is made to obtain the status of a ‘dormant company for a inactive company that doesn't trade.
Reasons (R): Dormant company doesn't trade but has significant accounting transaction.
In the light of the above statements, choose the most appropriate answer from the options given below -
Dormant company offers excellent advantage to which one of the following?
Given below are two statements : One is labelled as Assertion A and the other is labelled as Reason R.
Assertion (A): If a company gets status of a dormant company, then it is subject to less compliance in comparison to active company.
Reasons (R) : It will help to save of compliances for Inactive companies when they become dormant company under section 455 of the Companies Act, 2013 as compared to the Companies Act. 1956.
In the light of the above statements, choose the most appropriate answer from the options given below :
