Mr. Ram is a Chartered Accountant in practice. His sister is the CEO of XYZ Limited. State whether Mr. Ram is qualified or disqualified to be an auditor of the ABC Limited, which is a subsidiary company of XYZ Limited.

Question

Which of the following are the duties of an auditor?
(A) To measure business events in terms of profit and loss and communicate the financial conditions of the business
(B) To prepare a balance sheet representing a true and fair picture of the financial position of the business
(C) To prepare final accounts, computation of taxable income, etc., while acting as an accountant
(D) To report whether the profit and loss account represents a true and fair picture of the profit or loss

Answer 1

According to Section 141(3) of the Companies Act, the CEO's relatives are ineligible to be company auditors. Consequently, Mr. Ram does not qualify.

Firm 2	Cooperate	Compete
Firm 1	5, 5	0, 10
Compete	10,0	2, 2

Mr. Ram is a Chartered Accountant in practice. His sister is the CEO of XYZ Limited. State whether Mr. Ram is qualified or disqualified to be an auditor of the ABC Limited, which is a subsidiary company of XYZ Limited.

Show Hint

The Correct Option is B

Solution and Explanation

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