MCQ for CA Final Audit - Chapter 5 COMPANY AUDIT
Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 3 - Advanced Auditing and Professional Ethics - Chapter 5: COMPANY AUDIT - For Practice relevant for May/Nov 23 Examinations
Q:1 ABC Pvt. Ltd., a new company, incorporated on 01.07.2018 is engaged in the manufacturing business. On 30.07.2018, the Managing Director of ABC Pvt. Ltd. himself appointed CA Mohan, as the first auditor of the company.
- Appointment of Mr. Mohan is invalid as first auditor of a company can be appointed by members of the company as per Sec. 139 (6) of Companies Act, 2013.
- Appointment of Mr. Mohan is invalid as first auditor of a company can be appointed by Board of Directors as per Sec. 139 (6) of Companies Act, 2013.
- Appointment of Mr. Mohan is invalid as first auditor of a company can be appointed by members of the company as per Sec. 139 (1) of Companies Act, 2013.
- Appointment of Mr. Mohan is invalid as first auditor of a company can be appointed by Board of Directors as per Sec. 139 (1) of Companies Act, 2013.
Answer: 2
Q:2 KM Pvt. Ltd., engaged in the manufacturing business of Silk Shirts, is a newly incorporated company dated 01.09.2018. On 28.09.2018, the members of KM Pvt. Ltd. themselves appointed CA Raj, a renowned practitioner, as the first auditor of the company opposing that Board is not authorized to appoint the auditor.
- Appointment of CA Raj is valid as first auditor of a company can be appointed by members of the company as per Sec. 139(6) of Companies Act, 2013.
- Appointment of CA Raj is invalid as first auditor of a company within 30 days of incorporation of company can be appointed by CAG as per Sec. 139 (6) of Companies Act, 2013.
- Appointment of CA Raj is valid as first auditor of a company can be appointed by members of the company as per Sec. 139(1) of Companies Act, 2013.
- Appointment of CA Raj is invalid as first auditor of a company within 30 days of incorporation of company can be appointed by Board of Directors as per Sec. 139(6) of Companies Act, 2013.
Answer: 4
Q:3 KM Ltd., a Government company is incorporated on 01.09.2018. On 28.09.2018, the Board of Directors themselves appointed CA Raj, a renowned practitioner, as the first auditor of the company.
- Appointment of CA Raj is invalid as first auditor of a government company within 30 days of incorporation of company can be appointed by Central Government as per Sec. 139 (7) of Companies Act, 2013.
- Appointment of CA Raj is invalid as first auditor of a company within 60 days of incorporation of company can be appointed by Central Government as per Sec. 139 (6) of Companies Act, 2013.
- Appointment of CA Raj is invalid as first auditor of a government company within 30 days of incorporation of company can be appointed by CAG as per Sec. 139 (7) of Companies Act, 2013.
- Appointment of CA Raj invalid as first auditor of a government company within 60 days of incorporation of company can be appointed by CAG as per Sec. 139(7) of Companies Act, 2013.
Answer: 4
Q:4 PQR Company Ltd. removed their first auditor by passing a resolution in the meeting of the Board of Directors for his removal without obtaining prior approval from the Central Government.
- Removal is valid as approval of Central Government is not required in case of first auditor.
- Removal is not valid as approval of Central Government is not obtained.
- Removal is not valid as first auditor of a company cannot be removed.
- Removal is not valid as first auditor can be removed by Audit Committee.
Answer: 2
Q:5 "Mr. A, a practicing Chartered Accountant, is holding securities of XYZ Ltd. having face value of ₹ 90,000. XYZ Ltd. wants to appoint Mr. B, partner of Mr. A as its auditor. Mr. B does not hold any securities in the company.
- B is not eligible for appointment as an Auditor of "XYZ Ltd" as his partner holds securities of the company.
- B is eligible for appointment as an Auditor of "XYZ Ltd" as the value of securities hold by his partner is less than ₹ 1 Lac.
- B is eligible for appointment as an Auditor of "XYX Ltd" as he do not hold any securities of the company.
- B not eligible for appointment as an Auditor of "XYZ Ltd" as his partner holds securities of the company exceeding ₹ 1,000.
Answer: 1
Q:6 Mr. B, a partner of Mr. A held shares of face value of ₹ 1,05,000 in DEF Ltd., the holding company of ABC Ltd. Mr. B has sold the securities after a period of 45 days from the date of appointment of Mr. A as an auditor of ABC Ltd.
- Appointment of Mr. A in ABC Ltd. as auditor is valid as his partner Mr. B sold the securities within 60 days of appointment of Mr. A.
- Appointment of Mr. A in ABC Ltd. as auditor is valid as shareholding of Mr. B in the holding company of ABC Ltd. is of no relevance.
- Appointment of Mr. A in ABC Ltd. as auditor is invalid as his partner Mr. B hold shares in the holding company of ABC Ltd. at the time of appointment.
- Appointment of Mr. A in ABC Ltd. as auditor is invalid as his partner Mr. B hold shares in the holding company of ABC Ltd. in excess of ₹ 1 Lac.
Answer: 3
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