XYZ Limited is a company with 51% of its equity shares held by the State Government of Maharashtra and 49% by private investors. The Board of XYZ Limited seeks to appoint an auditor for the upcoming financial year. As per the Companies Act, 2013, which of the following statements is correct regarding the appointment of the auditor? (a) The Board of XYZ Limited has the authority to appoint the auditor through a board resolution. (b) The Comptroller and Auditor General (CAG) of India will appoint the auditor for XYZ Limited. (c) The shareholders of XYZ Limited will appoint the auditor in the annual general meeting. (d) The State Government of Maharashtra, holding the majority stake, will appoint the auditor 2 Marks
Q-2) Assess the eligibility of the following individuals for appointment as Auditors in accordance with the regulations outlined in the Companies Act, 2013: 1. 'Ms. Rekha', a practicing Chartered Accountant, and 'Mr. Alok', who is the spouse of 'Ms. Rekha', holds securities of 'Charcoal Ltd.' valued at a face value amount of ₹ 85,000 (with a market value of ₹ 75,000). The directors of Charcoal Ltd. Are considering the appointment of 'Ms. Rekha' as an auditor for the company. 2. 'Mr. Puri', a practicing Chartered Accountant, has a debt of ₹ 7 lakh owed to RAI Ltd. The directors of RAI Ltd. are considering the appointment of 'Mr. Puri' as an auditor for the company. 3. 'Ms. Komal', the real sister of 'Mr. Sharad', a Chartered Accountant, holds the position of CFO at Biotech Ltd. The directors of Biotech Ltd. are considering the appointment of 'Mr. Sharad' as an auditor for the company. 6 Marks
Q-3)
HD Software Limited is engaged in the business of providing software services. The company appointed its statutory auditors (not the first auditor). The Board of directors of the company informed the auditor that the fees shall be fixed by the Board of directors only. But the auditor objected to the same. Now the directors have approached you to advise them whether they can solely fix the remuneration of the auditor. 3 Marks
Q-4) SSR & Co. (Statutory Auditors) while conducting audit for financial year 2023-24, find out some manipulative entries in books of accounts of ASR Ltd. Auditors told the MD that internal control system of company is not reliable. The Board of Directors of ASR Ltd them to accept the assignment of designing and implementation of suitable financial information system to strengthen the internal control mechanism of the Company. The Company offered them a fee of ₹10 lakh plus taxes for this assignment for betterment of company. But Statutory Auditor refused to take the assignment. What are the consequences if they accept this 3 Marks Test 1 (Audit & Auditors) Time Alloted 90 Min MM 25 Marks Q-5)
Stallworth Ltd., a listed company having a paid up share capital of Rs 11 crore with a turnover of Rs 100 crore had appointed an Audit Committee which recommended M/s ANC & Associates, a firm of Chartered Accountants having such qualifications and experience as is required for appointment as the auditor of the company. The next Annual General Meeting (the AGM) was due on 30.09.2023. The Board disagreed with the said recommendation of the committee and refer back to it for reconsideration. The Audit Committee was adamant on appointing the above firm of the chartered accountants. Discuss in the light of the Companies Act, 2013: (i) The course of action for Board of Directors to resolve the above deadlock. What would be your answer, if above situation was that of filling the casual vacancy of auditors? (ii) The steps to be taken by the Board of Directors for appointment of auditors in case there was no requirement of Audit Committee in the company? (5 Marks)
Q-6)
One-fourth of the subscribed capital of AMC Limited was held by the Government of Rajasthan. Mr. Vikas, a Chartered Accountant, was appointed as an auditor of the Company at the Annual General Meeting held on 30th April, 2020 by an ordinary resolution. Mr. Mukesh, a shareholder of the Company, objects to the manner of appointment of Mr. Vikas on the ground of violation of the Companies Act, 2013. Decide whether the objection of Mr. Mukesh is tenable? Also examine the consequences of the above appointment under the said Act. 3 Marks
Q-7)
Mr. Yash is a partner and in charge of PQR firm. The firm is appointed as an auditor firm of A. K. Company limited (listed company). Mr. Yash retires from PQR firm and after some time join Gupta & Gupta firm as a partner, on 20/05/23. In the general meeting of the company held on 15/06/23, the company appointed Gupta & Gupta firm as next auditor of the company. Do you think the company has adhered to the provision of appointing Gupta & Gupta as auditor for the company, under the Company Act 2013. Explain? 3 Marks
