Page 309 - CA Final PARAM Digital Book.

Part 1- PSU

QNO Powers of C&AG Old Course-- (N07E, N11E, N12E, N13R, M15R, M16R, N16M, SM17,
597.000 TITANIUM CNO -- Unique PM17, M18R, M20M, SM21)
Ceta Ltd. is a company in which 58% of the paid-up share capital is held by Rajasthan Government. The
company is engaged in the business of providing consultancy services in relation to construction projects.
The audit of the financial statements of Ceta Ltd. for the financial year ended 31 March 2019 got
completed with lot of intervention of Comptroller & Auditor General of India, wherein C&AG was giving
directions to the auditors on the manner in which audit should be conducted in respect of certain areas.
Further, it also received comments from C&AG on the audit report of the auditors. Ceta Ltd is seeking
advice to go against C&AG so that they can avoid unnecessary interference of C&AG. You are required to
advise Ceta Ltd. with respect to role of C&AG in the audit of a Government company.

OR
Being an expert in the field of government audit, you are required to briefly explain the powers of
Comptroller and Auditor General of India with respect to supplementary audit and test audit as stated
under section 143(6) and 143(7) of the Companies Act, 2013.
OR
Enumerate the right of C&AG of India to conduct a supplementary audit of the financial statement of a
company, or comment upon or supplement audit report provided under section 143(6) of the Companies
Act, 2013.
Answer ➢ Powers of Comptroller and Auditor-General of India.
Appointment of the auditor in the case of a Government company: In the case of a

Government company, the comptroller and Auditor-General of India shall appoint the
auditor under sub-section (5) or sub-section (7) of section 139 i.e. appointment of First
Auditor or Subsequent Auditor and direct such auditor the manner in which the accounts
of the Government company are required to be audited and thereupon the auditor so
appointed shall submit a copy of the audit report to the Comptroller and Auditor-General
of India which, among other things, include the directions, if any, issued by the
Comptroller and Auditor-General of India, the action taken thereon and its impact on the
accounts and financial statement of the company.

Supplementary audit under section 143(6)(a) of the Companies Act, 2013:
The Comptroller and Auditor-General of India shall within 60 days from the date of receipt
of the audit report have a right to conduct a supplementary audit of the financial
statement of the company by such person or persons as he may authorize in this behalf;
and for the purposes of such audit, require information or additional information to be
furnished to any person or persons, so authorised, on such matters, by such person or
persons, and in such form, as the Comptroller and Auditor-General of India may direct.

Comment upon or supplement such Audit Report under section 143(6)(b) of the
Companies Act, 2013: Any comments given by the Comptroller and Auditor-General of
India upon, or supplement to, the audit report shall be sent by the company to every
person entitled to copies of audited financial statements under sub-section (1) of section
136 of the said Act i.e. every member of the company, to every trustee for the debenture-
holder of any debentures issued by the company, and to all persons other than such
member or trustee, being the person so entitled and also be placed before the annual
general meeting of the company at the same time and in the same manner as the audit
report.

Test audit under section 143(7) of the Companies Act, 2013: Without prejudice to

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