CHAPTER NO 1 QULIFICATION CRITERIA OF AUDITOR Flashcards
- Which of the following is eligible to be appointed as an auditor of a public company under Section 247?
a) A CA with a valid certificate of practice from ICAP.
b) A CMA without a valid certificate of practice.
c) A graduate accountant with five years of experience.
d) A person holding shares in the company.
A CA with a valid certificate of practice from ICAP.
For a private company that is a subsidiary of a public company, who can be appointed as an auditor?
a) A person with accounting expertise but no professional certification.
b) A firm of CAs with at least one partner qualified and holding a valid certificate of practice.
c) Any person authorized by the company’s board.
d) A CA without a certificate of practice.
A firm of CAs with at least one partner qualified and holding a valid certificate of practice.
For companies other than public companies, auditors can be:
a) Only CMAs with 10 years of experience.
b) CAs or CMAs holding a valid certificate of practice from their respective institutes.
c) Any accounting professional with a diploma.
d) CAs without any certification or registration.
) CAs or CMAs holding a valid certificate of practice from their respective institutes.
What is the minimum paid-up share capital required for a private company to appoint a CA or a firm of CAs as an auditor?
a) Rs. 1 million
b) Rs. 3 million
c) Rs. 5 million
d) Rs. 10 million
Rs. 3 million
A firm of CAs can be appointed as an auditor of a company if:
a) At least one partner holds a valid certificate of practice.
b) The majority of partners practicing are qualified and eligible for appointment.
c) All partners have general accounting experience.
d) The firm has been in practice for over five years
The majority of partners practicing are qualified and eligible for appointment.
Which of the following individuals can sign on behalf of an audit firm?
a) Any partner of the firm.
b) Only partners meeting the qualification criteria.
c) Employees of the firm with sufficient experience.
d) The senior-most partner of the firm, irrespective of qualification
Only partners meeting the qualification criteria.
A private company has a paid-up share capital of Rs. 2 million. Can it appoint a CA without a certificate of practice as its auditor?
a) Yes, because the paid-up capital is below Rs. 3 million.
b) No, because the CA must hold a valid certificate of practice.
c) Yes, if the shareholders approve the appointment at the AGM.
d) No, because a firm of CAs is mandatory for all companies
No, because the CA must hold a valid certificate of practice.
A public company is considering appointing a CMA without a certificate of practice as its auditor. Is this allowed?
a) Yes, if the CMA has relevant experience.
b) No, only CMAs with a valid certificate of practice can be appointed.
c) Yes, if approved by SECP.
d) No, public companies cannot appoint CMAs as auditors.
No, only CMAs with a valid certificate of practice can be appointed.
A firm of CAs has six partners, but only three partners meet the qualification criteria. Can the firm be appointed as an auditor?
a) Yes, because the majority of partners are qualified.
b) No, all partners must meet the qualification criteria.
c) Yes, but only the qualified partners can act on behalf of the firm.
d) No, unless SECP grants special approval.
Yes, because the majority of partners are qualified.
A person appointed as an auditor of a company is later found to be holding shares in the company. What is the implication?
a) The appointment is valid if the person sells the shares.
b) The appointment is disqualified as the person is not independent.
c) The person can continue if the majority of members approve.
d) The appointment remains valid, as shareholding does not affect qualifications
The appointment is disqualified as the person is not independent.
A company wants to appoint an audit firm where two partners are qualified but are not holding valid certificates of practice, and the remaining partners are unqualified. Can the firm be appointed?
a) Yes, because the majority of partners are qualified.
b) No, because the qualified partners must hold valid certificates of practice.
c) Yes, if the firm has prior experience auditing similar companies.
d) No, because all partners must hold certificates of practice
No, because the qualified partners must hold valid certificates of practice
A private company with a paid-up share capital of Rs. 4 million appoints an auditor who is not a CA or CMA. Is this appointment valid?
a) Yes, as private companies have no restrictions on auditor qualifications.
b) No, because the company exceeds the Rs. 3 million threshold for appointing a qualified auditor.
c) Yes, if the board of directors approves the appointment.
d) No, unless SECP grants special permission
b) No, because the company exceeds the Rs. 3 million threshold for appointing a qualified auditor.
