New NABARD Grade A : How to prepare ESI for Prelims & Mains- Sources & Strategy
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Question

Refer to the following information to answer the next 4 questions (Q 19 to Q 21) A body constituted under the provisions of the Companies Act, 2013, established as an independent authority to regulate the auditing profession and the Indian Accounting Standards. The body is responsible for making recommendations regarding accounting and auditing standards. It also oversees the Quality of Service provided by the accounting and audit professions. It is expected that the body’s functioning would result in improved domestic and foreign investments, improved economic growth, assistance in the development of the audit profession and supporting the globalization of business through compliance with international practices. The aim of the Central Government in this regard appears to be: • Setting up of a separate and independent regulatory body to assist in the framing and enforcement of legislation relating to accounting & auditing and • Improving investor and public confidence in the financial reporting of an entity. The need for this authority arose as a response to various corporate scams in recent times. The body has the responsibilities to make recommendations on the foundation and laying down of accounting and auditing policies and standards, Monitor and enforce the compliance of the accounting standards and auditing standards, to oversee the quality of service of the professionals (such as auditors) and suggest measures required for improvement in the quality of service.

In how many days do a statutory Auditor of a company needs to report fraud/suspected fraud?

A One Day Correct Answer Incorrect Answer
B Two Days Correct Answer Incorrect Answer
C Sixty Days Correct Answer Incorrect Answer
D One month Correct Answer Incorrect Answer
E Two months Correct Answer Incorrect Answer

Solution

Statutory Auditors are under a mandatory obligation to report fraud or suspected fraud if they observe suspicious activities, transactions or operating circumstances in a company that indicate reasons to believe that an offence of fraud is being or has been committed against the company by its officers or employees. In such an event, the Statutory Auditor shall initiate the steps prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 which begins with reporting the matter to the Board/Audit Committee within TWO days of his/her knowledge of the fraud.

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