Question:medium
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.
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
Auditor independence is key for transparent financial reporting.
Updated On: Jan 17, 2026
- Not disqualified as per Section 141(3) of Companies Act, 2013
- Disqualified as per Section 141(3) of Companies Act, 2013
- Not disqualified as per Section 140(3) of Companies Act, 2013
- Disqualified as per Section - 140(3) of Companies Act, 2013
Show Solution
The Correct Option is B
Solution and Explanation
Due to the prohibition outlined in Section 141(3) of the Companies Act, which restricts relatives of the CEO from serving as company auditors, Mr. Ram is ineligible for the auditor position.
Was this answer helpful?
0
Top Questions on Audit
- Arrange the following steps in Audit process in the correct order: (A). Formulation of audit plan.
(B). Issuance of audit report.
(C). Engagement of auditor
(D). Performing substantive procedures. Match List-I with List-II
- Want to practice more? Try solving extra ecology questions todayView All Questions