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WorksheetsCh 10 - Co Aud Part 1 Sec 141, 144 & 139
Total questions: 37
Worksheet time: 20mins
MCQ--CA1.14
Which of the following is correct :
CNO-CA.060
a) A firm where of all the partners practising anywhere are qualified for appointment may be appointed
by its firm name to be auditor of a company.
b) A firm where of majority of partners practising anywhere are qualified for appointment may be
appointed by its firm name to be auditor of a company.
c) A firm where of all the partners practising in India are qualified for appointment may be appointed
by its firm name to be auditor of a company.
A firm where of majority of partners practising in India are qualified for appointment may be
appointed by its firm name to be auditor of a company
MCQ--CA1.19
Statement I : A firm whereof majority of partners practising in India are qualified for appointment
may be appointed by its firm name to be auditor of a company.
Statement II : Where a firm including a limited liability partnership is appointed as an auditor of a
company, all the partners shall be authorised to act and sign on behalf of the firm.
CNO--CA.060
MCQ--CA1.12
Under sub-section (3) of section 141 along with Rule 10 of the Companies (Audit and Auditors) Rules, 2014 (hereinafter referred as CAAR), the following persons shall not be eligible for appointment as an auditor of a company, namely-
(i) a limited liability partnership registered under the Limited Liability Partnership Act, 2008;
(ii) an officer or employee of the company;
(iii) a person who is a partner, or who is in the employment, of an officer or employee of the company;
(iv) a person who, or his relative or partner is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company. It may be noted that the relative may hold security or interest in the company of face value not exceeding Rs. 1,00,000.
Which of the above is incorrect:
(a)INCS.26.3
"M/s FCA & Co (“The Firm”), Chartered Accountants is a Partnership Firm of Miss F, Miss C and Mr A based at Delhi. Partners are also engaged in the Investing Activities - that is they Purchase and Sale Shares of various firms and companies in their routine course of action. In past week, few Companies have approached the Firm to become their Auditors.
Company PQR P L - Miss F has been advising the company for its Investment for past couple of years. Miss C is indebted to the Company to the tune of Rs 1 Lakh."
III. "Which of the following Statement is correct in respect of PQR P L (“Company”)
(a). The Firm is eligible to be appointed as an Auditor of the Company
(b). The firm is not eligible to be appointed as an Auditor due to Miss C’s Indebtedness towards the Company
(c). The firm is not eligible to be appointed as an Auditor due to Miss F’s involvement as an Advisor to the Company
(d). The firm is eligible to be appointed as an Auditor of the Company, but it will have to disclose its indebtedness of Miss C in the Auditor’s Report"
MCQ--INCS.49.1
I. “State whether appointment of CA Rajendra is correct in law.
a). Yes, it is correct in law as per Companies Act, 2013
b). It is incorrect in law as per Companies Act, 2013 as the relative of director is not allowed to be
appointed as an auditor of the company.
c). It is correct in law as per Companies Act, 2013 because brother is not covered under the definition
of relative.
d). It is correct as appointment of auditor is not governed by any law in India.
INCS.04.2
ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019.
During the FY 2018-2019, Mrs. X wife of CA Mr. X who is partner in XYZ & Associates acquires certain shares of ABC Ltd. The audit firm is of the opinion that this may call for a disqualification for the firm for being working as the auditor of the company under the relevant provisions of the Companies Act 2013. Further, ABC Ltd. also approached the auditors to provide them the Investment Banking service to which the auditors denied as per the provisions of Companies Act 2013.
II. If Mrs. X acquires security exceeding the prescribed limit in the ABC Ltd., then XYZ & Associatesshall take corrective actions within………….days. What is the prescribed limit:
(a) 100 days, Market Value Rs 1,00,000
(b) 60 days, Face value Rs 1,00,000
(c) 90 days, Face value Rs 1,00,000
(d) 15 days, Market Value Rs 1,00,000
INCS 26.1
"M/s FCA & Co (“The Firm”), Chartered Accountants is a Partnership Firm of Miss F, Miss C and Mr A based at Delhi. Partners are also engaged in the Investing Activities - that is they Purchase and Sale Shares of various firms and companies in their routine course of action. In past week, few Companies have approached the Firm to become their Auditors. Before accepting the Audits, Partners want to ensure that they are not disqualified according to the Provisions of the Companies Act. So they are looking into this matter - Company wise - which is given below. You are requested to go through the following and answer the ensuing questions. Company ABC P L - Miss C owns share of ` 1000 in the Company and her Brother owns shares of Rs 50000 in the Company.
I. "Which of the following Statement is correct in respect of ABC P L (“Company”)
(a). The Firm is eligible to be appointed as an Auditor of the Company
(b). The Firm is not eligible to be appointed as an Auditor due to Shareholding of Miss C’s Brother in the Company
(c). The Firm is not eligible to be appointed as an Auditor due to Shareholding of Miss C in the Company
(d). The Firm is eligible to be appointed as an Auditor of the Company, but they will have to disclose about Shareholding in Auditor’s Report."
INCS 26.2
"M/s FCA & Co (“The Firm”), Chartered Accountants is a Partnership Firm of Miss F, Miss C and Mr A based at Delhi. Partners are also engaged in the Investing Activities - that is they Purchase and Sale Shares of various firms and companies in their routine course of action. In past week, few Companies have approached the Firm to become their Auditors. Before accepting the Audits, Partners want to ensure that they are not disqualified according to the Provisions of the Companies Act. So they are looking into this matter - Company wise - which is given below. You are requested to go through the following and answer the ensuing questions. Company XYZ P L - Mr A’s father owns shares of Rs 90000 in the Company. Mr A owes the Company in his personal capacity for the goods purchased by him to the tune of Rs 20000.
II. "Which of the following Statement is correct in respect of XYZ P L (“Company”)
(a). The Firm is not eligible to be appointed as an Auditor due to the indebtedness of Mr A
(b). The Firm is eligible to be appointed as an Auditor of the Company
(c). The Firm is not eligible to be appointed as an Auditor due to the Shareholding of Mr A’s Father in the Company
(d). The Firm is eligible to be appointed as an Auditor of the Company only after Mr A pays the amount due to the Company."
INCS 26.4
IV. "While considering the threshold limit for holding any interest or security in the company for theQualification for becoming an Auditor, which value is to be considered?
(a). Market Value
(b). Face Value
(c). Book Value
(d). Higher of the above"
INCS.26.5
V. "In case, Shareholding by a relative exceeds the threshold then in how many days Auditor is required to take corrective Action?
(a). 15 Days
(b). 30 Days
(c). 45 Days
(d). 60 Days
CA1.4
Miss Betty, relative of CA. Tweety (one of the partners of M/s AB & Co.), owed Rs. 1,50,000 to
Satyan Ltd. for goods purchased in the normal course of business. Later on, M/s AB & Co. was appointed as statutory auditors of Prakash Ltd. (which holds 51% shares in Satyan Ltd.). On discovering the said fact, Miss Betty cleared the dues to Satyan Ltd. on 59th day following the date of appointment of M/s AB & Co. as statutory auditors of Prakash Ltd. Which of the following statement is true in the given scenario with respect to validity of appointment of M/s AB & Co.?
Miss Betty, relative of CA. Tweety (one of the partners of M/s AB & Co.) is indebted to the subsidiary of Prakash Ltd. but not to the company itself. Thus, the appointment of M/s AB & Co. as the statutory auditors of Prakash Ltd. is valid.
M/s AB & Co. is not eligible for appointment as an auditor of Prakash Ltd. as Miss Betty, relative of CA. Tweety (one of the partners of M/s AB & Co.) is indebted to Satyan Ltd. (subsidiary of Prakash Ltd.) Thus, the appointment made is not valid
As the corrective action has been taken regarding indebtedness to Satyan Ltd. (subsidiary of Prakash Ltd.) within 60 days of such appointment, the appointment of M/s AB & Co. is valid.
There is no such contravention of the provisions of the Companies Act, 2013 in the given scenario. Thus, the appointment of M/s AB & Co. as the statutory auditors of Prakash Ltd. is valid.
CA1.26
PQR & Associates, a firm of Chartered Accountants, has three partners P, Q and R. The firm is already having audit of 60 public companies. Now, the firm gets an offer from three company audits, out which one is a dormant company, second is a one-person company and third is a private company having paid up share capital of ` 90 Crores. In this situation:
Auditor cannot accept any of the company audit being offered
Auditor can accept the audit of one-person company only
Auditor can accept the audit of one-person company and dormant company, but not that of private company
Auditor can accept audit of all three company audits being offered
INCS.22.3
Venus Ltd. is a public limited company having turnover of ` 150 crores during the current financial year i.e. FY 2019-20 which is the first financial year for the company after its registration.
M/s AMR & Associates are appointed as the first auditors of Venus Ltd.
M/s AMR & Associates is having partners Mr. A, Mr. M, Mr. R all Chartered Accountants.
Mr. A, Mr. M, Mr. R are holding appointment as auditors in 10, 15, 20 companies respectively. The above numbers are after taking into account appointment of M/s AMR & Associates as auditors in Venus Limited.
During the course of audit, the auditors understand that since Venus Ltd is a public limited company, their duty is to also report on the adequacy of internal financial control of Venus Ltd
Further, Venus Ltd holds 20% equity share capital of Mercury Ltd which has approached M/s AMR & Associates for certain assignments namely Tax audit, Actuarial Science, Outsourced Financial services. Based on the above facts, answer the following:-
III. "What is the maximum number of audits remaining in the name of M/s AMR & Associates:
(a). 60
(b). 25
(c). 10
(d). 15
MCQ--Incs.54.1
“With reference to para 1, S K and Associates can take corrective actions within _______days. The relative may hold security or interest in the company of face value not exceeding ____________
a) 45 days, Face Value Rs.100000/-
b) 60 days, Market Value Rs.500000/-
c) 30 days, Face Value Rs. 500000/-
d) 60 days, Face Value Rs.100000/-
CA1.37
Mr. Y is statutory auditor of “Always on Air Limited” under Companies Act,2013 for year 2021-22. He has to travel a lot in connection with professional audit work to different locations in India. While travelling, he prefers tickets of “Always on Air Limited”. The tickets are booked by him through portal of the company at prevailing market prices. He has purchased tickets of `5,05,000/- during year 2021-22 in above manner. Which of the following statements is most appropriate in this regard?
Mr. Y has become disqualified to be appointed as auditor of company by virtue of business relationship with the company.
Such a situation has no express disqualification under Companies Act. However, there is threat to independence of Mr. Y by virtue of self-interest threats. Therefore, he should withdraw from engagement.
Mr. Y has not incurred disqualification under Companies Act.
Such a situation has no express disqualification under Companies Act. However, there is threat to independence of Mr. Y by virtue of advocacy threats. Therefore, he should withdraw from engagement.
CA1.5
As per Section 139(6), the first auditor of a company, other than a Government company, shall be appointed
a) by the Board of Directors within 30 days from the date of registration of the company.
b) by the audit committee within 30 days from the date of registration of the company.
c) by the Managing Director within 30 days from the date of registration of the company.
d) by the shareholders within 30 days from the date of registration of the company
CA1.7
As per Section 139(8), any casual vacancy in the office of an auditor shall in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India.
a) be filled by the Audit committee within 60 days.
b) be filled by the Audit committee within 30 days.
c) be filled by the Board of Directors within 60 days.
d) be filled by the Board of Directors within 30 days.
CA1.10
Section 139(7) provides that in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General of India _________ from the date of registration of the company.
a) within 60 days
b) within 30 days
c) within 90 days
d) within 45 days
CA1.11
Springfield Hospital located in the rural area of Lonawala region is a government hospital run by the local doctors who are appointed by the government. The hospital was registered on 1 October 2018.
Which of the following is correct in respect of the appointment of the first auditor for Springfield Hospital?
a) The Board of Directors of the hospital have appointed the first auditor on 5th November 2018.
b) The Comptroller Auditor-General of India appointed the first auditor on 15th December 2018.
c) Since the Comptroller Auditor-General of India did not appoint the first auditor, the Board of Director appointed the first auditor on 15th December 2018.
d) Since the Comptroller Auditor-General of India did not appoint the first auditor, the Board of Director appointed the first auditor on 10th November 2018.
CA1.21
A director of YH Limited ( which is not a Government Company ) by the name of Mr. W was of the opinion that first auditors of YH Limited must be appointed by Members of YH Limited within 40 days from the date of registration of YH Limited. The opinion of Mr. W is incorrect because:
a) The first auditor of YH Limited shall be appointed by Board of Directors of YH Limited within 30 days from the date of registration of YH Limited.
b) The first auditor of YH Limited shall be appointed by Board of Directors of YH Limited within 60 days from the date of registration of YH Limited.
c) The first auditor of YH Limited shall be appointed by Members of YH Limited within 30 days from the date of registration of YH Limited.
d) The first auditor of YH Limited shall be appointed by Members of YH Limited within 60 days from the date of registration of YH Limited.
INCS.22.1
· Venus Ltd. is a public limited company having turnover of ` 150 crores during the current financial year i.e. FY 2019-20 which is the first financial year for the company after its registration.
· M/s AMR & Associates are appointed as the first auditors of Venus Ltd.
"M/s AMR & Associates shall hold the office as auditor of Venus Ltd.:-"
(a). For one term of five consecutive years
(b). Till the conclusion of first Annual General Meeting
(c). For two terms of five consecutive years.
(d) None of the above.
INCS.22.5
"Had Venus Ltd. been a government company, who would have appointed the first auditors of the company. Also state the relevant provisions of the Companies Act 2013 :-
(a) Board of Directors, within 10 days of registration. Section 139(7)
(b) Comptroller & Auditor General of India, within 60 days of registration, section 139(7)
(c) Central Government, within 60 days of registration of company, Section 139(5)
d) Central Government, within 30 days of registration of company, Section 139(5)
CA1.1
CA. Daffy is the auditor of x Bose Ltd. for the previous 2 years. However, due to certain unavoidable circumstances, no Annual General Meeting (AGM) was held for the current Financial Year ending on 31st March 2018 within every possible time limit and thus, the ratification procedure for her appointment in the AGM could not be performed. Whether she may continue to hold the office of the auditor?
a) CA. Daffy may continue to hold the office of the auditor for the current Financial Year only and thereafter shall resign herself as the ratification procedure could not be completed.
b) CA. Daffy shall continue to hold the office of the auditor and ask the Board to reappoint her in a private meeting.
c) CA. Daffy shall continue to hold the office of the auditor as no such ratification provisions for appointment by members at every AGM exist.
d) CA. Daffy shall not continue to hold office of the auditor as the ratification procedure could not be completed as per proviso to section 139(1) of the Companies Act, 2013.
CA1.23
A partnership Firm of Chartered Accountants by the name of HS and Associates completed its two terms of five consecutive years as auditor of Y65 Private Limited in the financial year 2018-19. Y65 Private Limited had a paid up share capital of Rupees 58 crore.
HS and Associates cannot be reappointed as auditor of Y65 Private Limited for how many years after completion of two terms of five consecutive years as auditor of Y65 Private Limited in the financial year 2018-19:
a) 10 years.
b) 5 years.
c) 3 years.
d) 2 years.
CA1.29
Section 139(1) of the Companies Act, 2013 provides that every company shall, at the first annual general meeting appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting
a) till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.
b) till the conclusion of its sixth annual general meeting only.
c) till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every fifth meeting.
d) till the conclusion of its fifth annual general meeting and thereafter till the conclusion of every fifth meeting.
CA1.3
CA. Sylvester, the statutory auditor of Yosemitee Pvt. Ltd., encountered unavoidable circumstances that bring into question his ability to continue holding office of the auditor. Considering it appropriate, CA. Sylvester resigned from the office of auditor of Yosemitee Pvt. Ltd. and thus, the Board of Directors itself appointed CA. Granny, a practicing Chartered Accountant, as the statutory auditor of the company to hold office of the auditor till the conclusion of 6th meeting. Which of the following statement is true in the given scenario?
a) The appointment of CA. Granny made by the Board of Directors is invalid.
b) Casual vacancy can be filled by the Board of Directors subject to approval by the company at a general meeting convened within 3 months of the recommendation of the Board.
c) CA. Granny cannot hold the office of auditor till the conclusion of 6th meeting i.e., the appointment cannot be made for five years. The auditor can hold office only till the conclusion of the next AGM.
d) All of the above.
INCS.22.2
· Venus Ltd. is a public limited company having turnover of ` 150 crores during the current financial year i.e. FY 2019-20 which is the first financial year for the company after its registration.
"What are the relevant provisions of the Companies Act 2013 related to the audit committee. Whether Venus Ltd. is required to constitute an Audit Committee?
(a) Section 167, No
(b) Section 117, Yes
(c) Section 177, Yes
(d) Section 176, No
INCS.20.1
"Section 139 prescribes that before appointment of an auditor, certificate is to be obtained from auditor that appointment, if made, shall be in accordance with certain conditions. Which of the following is not such condition in case of a listed public company?
(a). the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder;
(b). the proposed appointment is as per the term provided under the Act;
(c). the proposed appointment is within the limits laid down by or under the authority of the Act;
(d). the proposed appointment is as per regulations of SEBI
INCS.20.3
"In case of a government company, the statutory auditor under companies Act is appointed by: -
(a). Shareholders in annual general meeting
(b). Board of directors in annual general meeting
(c). CAG which is a constitutional authority
(d). CAG which is a constitutional authority in consultation with Central Government"
CA1.8
In case of a company that is required to constitute an Audit Committee under section 177, the committee, and, in cases where such a committee is not required to be constituted, __________, shall take into consideration the qualifications and experience of the individual or the firm proposed to be considered for appointment as auditor and whether such qualifications and experience are commensurate with the size and requirements of the company.
a) the board
b) any director
c) Managing Director
d) Whole time director
CA1.13
Where a company is required to constitute an Audit Committee under section 177,
a) all appointments, including the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee.
b) all appointments, excluding the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee.
c) appointment of first auditors shall be made after taking into account the recommendations of such committee.
d) appointment of subsequent auditors shall be made after taking into account the recommendations of such committee.
CA 1.33
a) Only M4 Private Limited
b) Both M4 Private Limited and N3 Private Limited.
c)Both Y2 Limited and N3 Private Limited
d)Both Y2 Limited and Z1 Limited.
CA1.34
There was a public limited company by the name of YW Limited. According to the last audited Financial Statements of YW Limited, the Paid Up Capital was Rupees 20 crore. A Partnership Firm of Chartered Accountants was required to be appointed as Auditor of YW Limited. In this scenario, which appropriate authority would consider the qualifications and experiences of Partnership Firm of Chartered Accountants for being appointed as an auditor of YW Limited considering the size and requirements of YW Limited:
a) Members of YW Limited.
b) Audit Committee of YW Limited.
c) Board of Directors of YW Limited.
d) Independent Directors of YW Limited.
INCS.20.4
"Which of the following is incorrect regarding scope of actions of audit committee constituted under section 177 of Companies Act, 2013?
a) The audit committee can make recommendation regarding appointment and terms of appointment of auditors.
b) The audit committee cannot make recommendations regarding remuneration of auditors.
c) The audit committee can review and monitor auditor’s independence and performance.
d) The audit committee can undertake monitoring of effectiveness of audit process."
INCS.20.5
"Which of the following is correct regarding formation of audit committee under section 177 of Companies Act, 2013?
a) The audit committee is to be constituted by every public company.
b) The audit committee is to be constituted by every public company and private company having paid up capital and reserves of more than ` 100 crore.
c) The audit committee is to be constituted by every listed public company.
d) The audit committee is to be constituted by every listed company and private company having paid up capital and reserves of more than ` 100 crore."
INCS.28.1
"Sections 139 to 148 of the Companies Act, 2013 relating to audit of companies which broadly deal with who can be appointed as an auditor under the Act, i.e., qualifications and disqualifications, the manner of appointment, removal of an auditor and rights and duties of an auditor.
Keeping above mentioned sections in mind, what guidelines/procedures need to be followed by M/s ABC Ltd and Mr Samuel when M/s ABC Ltd appointed Mr Samuel as statutory auditor of the company for the Financial Year 2019-2020".
I. "Mr Samuel needs to furnish his written consent and a certificate to the company
(a) Before his appointment
(b) Within 15 days of his appointment
(b) Within 30 days of his appointment
(d) None of the above
INCS.04.1
ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely coffee is of Rs.95 crores during the immediately preceding Financial Year.
I. Based on the above facts, answer the following:-
1. After the appointment of XYZ & Associates, ABC Ltd. should inform the auditor and file a notice of such appointment with registrar within:-
a) 60 days
b) 30 days
c) 15 days
d) 20 days
