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    Question

    An auditor cannot audit a firm if his/her relative is

    indebted to the company in excess of ______
    A Rs.1 lakh Correct Answer Incorrect Answer
    B Rs.2.5 lakh Correct Answer Incorrect Answer
    C Rs.5 lakh Correct Answer Incorrect Answer
    D Rs.7.5 lakh Correct Answer Incorrect Answer
    E Rs.10 lakh Correct Answer Incorrect Answer

    Solution

    As per Companies Act, 2013, a person is disqualified from being an auditor for a company if he/she, or his/her relative or partner: §  is holding any security of the Company or its subsidiary or its holding or associate company or a subsidiary of such holding company, (note – the act provides that the relative may hold security or interest in the company of face value not exceeding Rs.1 lakh or such sum as may be prescribed) §  is indebted to the company or its subsidiary or its holding or associate company or a subsidiary of such holding company in excess of Rs.5 lakh §  has given guarantee or provided any security in connection with the indebtedness to company, its holding, subsidiary and associate Company in excess of Rs.1 lakh

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