Page 89 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
4 (M20M)
ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. approached audit firm
XYZ & Associates for the statutory audit of its financial statements for the year ended 31.03.2019. The
Gross turnover of the company is Rs.105 crores, out of which turnover from one of its product namely
coffee is of Rs.95 crores during the immediately preceding Financial Year.

During the course of Audit, XYZ & Associates found certain delay in the payment of the Employees
Provident Fund by ABC Ltd. They understand that the same need to be reported under the relevant
provisions of Companies (Auditors Report) Order 2016.

During the FY 2018-2019, Mrs. X wife of CA Mr. X who is partner in XYZ & Associates acquires certain

shares of ABC Ltd. The audit firm is of the opinion that this may call for a disqualification for the firm for
being working as the auditor of the company under the relevant provisions of the Companies Act 2013.

Further, ABC Ltd. also approached the auditors to provide them the Investment Banking service to which
the auditors denied as per the provisions of Companies Act 2013.

During the course of audit, XYZ & Associates has reason to believe that an offence of fraud involving
some amount has been committed in the ABC Ltd. by its General Manager. The auditors understand
that there is a requirement for reporting of fraud by the auditors under the Companies Act and the
relevant rules.
I. Based on the above facts, answer the following:-
1. After the appointment of XYZ & Associates, ABC Ltd. should inform the auditor and file a notice
of such appointment with registrar within:-

(a) 60 days
(b) 30 days
(c) 15 days
(d) 20 days
II. If Mrs. X acquires security exceeding the prescribed limit in the ABC Ltd., then XYZ & Associates
shall take corrective actions within………….days. What is the prescribed limit:-
(a) 100 days, Market Value Rs 1,00,000
(b) 60 days, Face value Rs 1,00,000
(c) 90 days, Face value Rs 1,00,000
(d) 15 days, Market Value Rs 1,00,000

III. Under which section reporting of fraud by an auditor to the Central Government is required and
what is the amount of fraud:-
(a) Section 143(12), 1 crore & above
(b) Section 139(12), 1 crore & above
(c) Section 143(12), 2 crore & above
(d) None of the above
IV. What is the requirement for ABC Ltd as per the relevant provisions regarding maintenance of cost
records:-
(a) Maintenance of cost records is mandatory, in form CRA 1.
(b) Maintenance of cost records is mandatory, in form CRA 2.
(c) Maintenance of cost records is mandatory, in any general format.
(d) No requirement of maintenance of cost records

V. Under relevant clause of CARO,2016, XYZ & Associates are required to report the extent of arrears
of Employees Provident Fund as at the balance sheet date:-
(a) Exceeding 9 months
(b) Exceeding 3 months
(c) Exceeding 6 months
(d) Exceeding 12 months

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