Who among the following is eligible to be appointed as an audit of Government Company?

 Options:

a) A chartered accountant in practice b) A chartered accountant whether in practice or not c) An auditor appointed by the C & AG d) Any of the above

The Correct Answer Is:

a) A chartered accountant in practice

Now, let’s delve into why this answer is correct in detail and explain why the other options are not correct one by one.

Explanation of the Correct Answer: a) A chartered accountant in practice

A chartered accountant in practice is eligible to be appointed as an auditor of a Government Company. This eligibility is based on the provisions of the Companies Act, 2013. Under the Companies Act, 2013, it is a statutory requirement that every Government Company must appoint an auditor to conduct an audit of its financial statements.

The auditor is responsible for ensuring the accuracy and reliability of the company’s financial statements and reporting their findings to the shareholders and relevant government authorities.

A chartered accountant in practice is a professional who is qualified to carry out audits, financial assessments, and other accounting-related tasks. They have the necessary expertise and experience to perform the audit effectively.

The Companies Act, 2013, mandates that the auditor of a Government Company must be a chartered accountant in practice. This ensures that the audit is conducted by a qualified professional who can provide an independent and unbiased assessment of the company’s financial affairs.

Explanation of Why the Other Options are Incorrect:

b) A chartered accountant whether in practice or not:

While a chartered accountant, whether in practice or not, may have the necessary qualifications and expertise, the Companies Act, 2013, specifically states that the auditor of a Government Company must be a chartered accountant in practice.

This means that the auditor must be actively engaged in providing auditing services to clients. Chartered accountants who are not in practice may have expertise in other areas of finance or may be employed in non-audit roles, but they do not meet the legal requirement for appointment as an auditor for a Government Company.

c) An auditor appointed by the C & AG (Comptroller and Auditor General):

The Comptroller and Auditor General (C & AG) is a constitutional authority responsible for auditing government accounts and expenditures. While the C & AG plays a crucial role in ensuring transparency and accountability in government financial transactions, their mandate primarily covers government departments and agencies.

The C & AG does not have the authority to appoint auditors for Government Companies. These companies are separate legal entities and have their own governance structures, which include appointing their own auditors as per the Companies Act, 2013.

d) Any of the above:

This option is incorrect because none of the options b) and c) meet the specific legal requirement outlined in the Companies Act, 2013, for the appointment of an auditor for a Government Company.

As mentioned earlier, the Act stipulates that the auditor must be a chartered accountant in practice. Therefore, the option “any of the above” does not apply in this context.

In summary, the Companies Act, 2013, provides a clear and specific requirement that a chartered accountant in practice must be appointed as the auditor for a Government Company.

While other professionals or authorities may have valuable roles in auditing different aspects of government finances, they do not meet the legal criteria for serving as auditors for Government Companies. This ensures that the audit is conducted by a qualified and independent professional with expertise in financial assessments and reporting.

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