Which of the following statement is not true regarding appointment of statutory auditor by the Central Government?

 Options:

a) Such powers have been conferred upon it by section 224(3) b) If a company fails to appoint an auditor at a general meeting c) If an auditor refuses to accept appointment, the powers of the Central Government can be exercised. d) None of the above

The Correct Answer Is:

b) If a company fails to appoint an auditor at a general meeting

The correct Answer Explanation: (b) If a company fails to appoint an auditor at a general meeting.

In detail, the Companies Act, which governs the appointment of statutory auditors in India, provides provisions for the Central Government to step in if certain conditions are not met by the company. Section 224(3) of the Companies Act confers the power upon the Central Government to make an appointment of an auditor under specific circumstances.

If a company fails to appoint an auditor at a general meeting, it triggers the conditions under which the Central Government can exercise its powers.

The correct answer, (b) If a company fails to appoint an auditor at a general meeting, highlights a specific condition under which the Central Government’s intervention is warranted as per section 224(3) of the Companies Act.

When a company, as mandated by law, holds its general meeting but fails to appoint an auditor, it triggers a situation where the Central Government can step in to ensure compliance with auditing requirements.

This provision emphasizes the importance of timely auditor appointments for maintaining financial transparency and adherence to regulatory standards within companies. The involvement of the Central Government in such scenarios serves to uphold the integrity of audit processes and financial reporting in the corporate sector.

Therefore, option (b) accurately denotes a circumstance that triggers the Central Government’s powers for auditor appointment, as outlined in the Companies Act.

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

a) Such powers have been conferred upon it by section 224(3):

This statement is indeed correct. Section 224(3) of the Companies Act 2013 in India explicitly grants the Central Government the authority to appoint an auditor under specific circumstances.

This section outlines scenarios such as the failure of a company to appoint an auditor at its general meeting or if an appointed auditor refuses to accept the position. The provision exists to ensure that companies comply with the requirement of appointing an auditor and to maintain financial transparency and accountability.

So, option (a) is accurate in stating that the Central Government’s powers in appointing an auditor stem from section 224(3) of the Companies Act.

c) If an auditor refuses to accept appointment, the powers of the Central Government can be exercised:

This statement is also true. Section 224(3) not only covers situations where a company fails to appoint an auditor but also encompasses scenarios where an appointed auditor declines or refuses to accept the appointment.

In such cases, the Central Government is empowered to step in and make the necessary appointment to ensure the continuity of audit processes and compliance with regulatory requirements. Therefore, option (c) accurately represents the circumstances under which the Central Government can exercise its powers as defined by the Companies Act.

d) None of the above:

This statement is false. Both options (a) and (c) are accurate representations of the powers vested in the Central Government regarding the appointment of auditors under section 224(3) of the Companies Act.

Option (d) suggests that none of the statements are correct, but this is incorrect as options (a) and (c) align with the provisions outlined in the legislation. Hence, option (d) is inaccurate as it fails to recognize the validity of options (a) and (c).

In summary, options (a) and (c) accurately reflect the provisions of section 224(3) of the Companies Act regarding the powers granted to the Central Government for appointing auditors under specific circumstances.

Option (d) is incorrect as it denies the accuracy of statements (a) and (c), both of which are aligned with the stipulations of the Companies Act.

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