Chap 6

Question 1

First auditor

Answer 1

BOD within 90 days of incorporation
If not then commission may appoint

Question 2

Subsequent auditor

Answer 2

Members at Agm
If unable to do so commission

Question 3

Casual Vacancy

Answer 3

Filled by director within 30 days of occurrence if unable to do so commission

Question 4

Mid term removal

Answer 4

Mid term removal by members by passing special resolution. BOD shall appoint with prior approval of commission

Question 5

Disqualified Person Appointed

Answer 5

Void appointment
Commission shall appoint

Question 6

Auditor unwilling to act

Answer 6

Commission shall appoint in this case

Question 7

Tenure of auditor

Answer 7

From date of appointment
Till conclusion of next Agm

Question 8

Removal of auditor

Answer 8

At AGM/ retirement

Before Agm/ mid ter removal

Question 9

Remuneration

Answer 9

Decided by appointing authority
i.e. If appointed by director so he will decide

Question 10

Recommendation by directors (for appointment)

Answer 10

Consent of proposed auditor
Notice to member and retiring auditor in notice of agm

Question 11

Statutory auditor - Rights

Answer 11

Information
1. Access to books of accounts (at reg office or branch)
2. Require information

Question 12

Statutory auditor rights during audit

Answer 12

Information
Access to books of account

Require information
-employees of company
-employees of subsidiary
-other holding books

Question 13

Rights of statutory auditor after audit

Answer 13

General meeting
-Receive notice
-Attend
-Speak
-Make representation

Question 14

Duties of statutory auditor

Answer 14

1. F/s give true and fair view
2. Prepare books of account
3. Zakat
4. Investment/Expenditure incurred
   5z f/s drawn up
5. Information obtained

Question 15

Qualification criteria of CA

Answer 15

1. Public company or
2. private company which is subsidiary of public company
3. Private company paid up capital of rs. 3 million or more

Others CA, CMA

Question 16

Disqualification criteria

Answer 16

1. Shareholding - Discloses at time of appointment and Disposes within 90 days of appointment. (Spouse, Minor child) a company and associated company.

Question 17

Indebted auditor

Answer 17

-Took loan from ordinary course of business, bank (he can do audit)
- Credit card with limit 1m, does not exceed. (Not for spouse)
- utility bill not paid for more than 90 days

Question 18

Audit of cost accounts

Answer 18

Company engaged in production, processing manufacturing or mining is required to keep following cost accouting records:
Utilisation of material
Uti of labour
And uti of other input or items of cost

Question 19

When to conduct cost audit

Answer 19

Commission may direct that an audit of cost accounts of the company shall be conducted as may be specified in the order

Question 20

Who conducts cost audit

Answer 20

Chartered Accountant (CA ordinance 1961)
CMA (CMA act 1966)

Question 21

Disqualification Criteria of statutory auditor

Answer 21

He or his spouse/minor child owns shares of company or associated company
If he is indebted to the company
If he has business relationship with the company
If he is or was employee of the company in last 3 years
If he is any employee/partner of employee of the company
If his spouse is director in the company
If he is a body corporate
If he has given guarantee or security
If he has been convicted by court of an offence involving fraud for last 10yrs
If hes ineligible for appointment as auditor under code of ethics of Icap/icma