The auditor of a Government company is appointed by the C & AG. His remuneration is fixed by__

 Options:

a) the C & AG b) the shareholders c) the shareholders at an annual general meeting d) the board of directors

The Correct Answer Is:

b) the shareholders

The correct answer is not (b) the shareholders; instead, it is (a) the C & AG who fixes the remuneration of the auditor of a Government company. In this explanation, I will detail why the answer is (a) and why the other options are not correct.

Why the Correct Answer is (a) the C & AG:

The Comptroller and Auditor General of India (C & AG) plays a critical role in the oversight of government finances and public sector enterprises in India. The appointment and remuneration of the auditor of a Government company, which is a public sector entity, are subject to the provisions of the Companies Act and other relevant statutes in India.

i. Appointment Authority:

The C & AG has the authority to appoint the auditor for government companies. The C & AG’s primary responsibility is to audit the accounts of government companies to ensure the proper and efficient use of public funds. As such, the C & AG is vested with the power to select auditors who can conduct a thorough and impartial audit of these companies.

ii. Remuneration Fixation:

The C & AG also has the power to fix the remuneration of the auditor. This is done to ensure the independence and integrity of the auditing process.

The auditor’s remuneration is typically based on various factors such as the size and complexity of the government company, the extent of the audit work required, and the prevailing audit standards. The remuneration is determined to ensure that it is fair and reasonable for the services provided.

iii. Independence of Auditors:

The auditor’s independence is a crucial aspect of the auditing process. By having the C & AG fix the auditor’s remuneration, the government ensures that the auditor is not unduly influenced by the government company’s management or shareholders, which could compromise the quality and objectivity of the audit.

iv. Legal Framework:

The legal framework governing government companies and their auditing procedures is established to maintain transparency and accountability. The C & AG’s role in appointing and fixing the remuneration of auditors is in line with this framework.

Now, let’s explain why the other options are not correct:

b) the shareholders:

The shareholders of a government company do not have the authority to appoint or fix the remuneration of the auditor. In government companies, the primary shareholder is the government itself, and the C & AG represents the government’s interests in appointing and determining the remuneration of the auditor.

Shareholders typically have a say in appointing auditors in private companies, but this is not the case for government companies.

c) the shareholders at an annual general meeting:

Similar to the previous option, shareholders, whether at an annual general meeting or any other meeting, do not have the authority to appoint or fix the remuneration of the auditor for government companies.

The authority for such appointments and remuneration fixation rests with the C & AG and is regulated by the relevant laws and regulations.

d) the board of directors:

In government companies, the board of directors is typically appointed by the government and is responsible for managing the company’s affairs.

However, they do not have the authority to appoint or determine the remuneration of the auditor. This responsibility is vested in the C & AG to ensure the independence and impartiality of the audit process.

In summary, the correct answer is (a) the C & AG, as the C & AG is responsible for appointing and fixing the remuneration of auditors in government companies to maintain the integrity and independence of the auditing process, in accordance with the legal framework governing such entities.

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