Page 310 - CA Final PARAM Digital Book.

the provisions relating to audit and auditor, the Comptroller and Auditor-General of India
may, in case of any company covered under sub-section (5) or sub-section (7) of section
139 of the said Act, if he considers necessary, by an order, cause test audit to be
conducted of the accounts of such company and the provisions of section 19A of the
Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971,
shall apply to the report of such test audit.

QNO Committee on Public Sector Old Course – (M23M)
597.500 TITANIUM CNO -- PSU.040 New Course – (SM23)
PGC & Associates are statutory auditors of BNPC Limited, a PSU in power sector. It is engaged in building
large sized thermal power stations to accelerate development of power sector in the country.

One of the financial committees of Parliament has decided to examine its physical and financial
performance. It has also examined audit findings of C&AG in respect of which action is yet to be taken by
the said PSU. The committee also proposes to include in its report performance of the company in various
operational matters.

Which financial committee of Parliament deals with such matters? Outline its main functions.
Answer The said matters are dealt by Committee on Public Undertakings (COPU). The functions of the Committee
are -
(i) to examine the reports and accounts of public undertakings.

(ii) to examine the reports of the C&AG on public undertakings.

(iii) to examine the autonomy and efficiency of public undertakings and to see whether they are being
managed in accordance with sound business principles and prudent commercial practices.

(iv) to exercise such other functions vested in the PAC and the Estimates Committee as are not covered
above and as may be allotted by the Speaker from time to time.

The examination of public enterprises by the Committee takes the form of comprehensive appraisal or
evaluation of performance of the undertaking. It involves a thorough examination, including evaluation of
the policies, programmes and financial working of the undertaking.

QNO C&AG has Powers to give directions New Course – (SM23)
597.510 TITANIUM CNO -- Unique

PS & Associates are statutory auditors of a Central government owned company for a particular year. The
statutory auditors were required to examine the following areas mandatorily, provide their specific
replies and also their impact on financial statements for that particular year in their audit report.

1. Whether the company has system in place to process all the accounting transactions through IT
system? If yes, the implications of processing of accounting transactions outside IT system on the
integrity of the accounts along with the financial implications, if any, may be stated.

2. Whether there is any restructuring of an existing loan or cases of waiver / write off of debts / loans
/ interest etc. made by a lender to the company due to the company’s inability to repay the loan? If
yes, the financial impact may be stated. Whether such cases are properly accounted for?

3. Whether funds (grants/subsidy etc.) received / receivable for specific schemes from Central
government or its agencies were properly accounted for / utilized as per its term and conditions?
List the cases of deviation.

Can you gauge likely nature of such responsibility thrust upon auditors of above PSU?"

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