Group 13: CARO & Company Audit

Correct answer B: The body corporate is disqualified; its CA director does not make that entity eligible.

Section 141(3)(a) excludes a body corporate other than a registered LLP; the entity and its director are not interchangeable.

Correct answer A: Section 141 also bars a person employed by an officer or employee of the company.

Section 141(3)(c) separately covers a partner of, or person in employment of, an officer or employee.

Correct answer C: Apply the relative director/KMP disqualification and, if incurred after appointment, the vacation/casual-vacancy consequence.

Sections 141(3)(f) and 141(4) cover the supplied relationship and subsequent disqualification; disclosure alone is no cure.

Correct answer C: The Board informs members, who appoint at an EGM within the stated 90 day period.

Section 139(6) gives the Board-failure member/EGM route and tenure until first AGM; this is not the government-company route.

Correct answer A: Written consent and the required certificate should be obtained before appointment.

Section 139(1) makes the written consent/compliance-certificate step prior to appointment.

Correct answer B: The statutory common-partner restriction must be checked; changing the firm name is not a cure.

Section 139(2) imposes the specified five-year common-partner restriction on the supplied conditions.

Correct answer D: The statutory report must state reasons for the negative or qualified answer.

Section 143(4) requires report reasons; whole-statement opinion implications require separate assessment.

Correct answer B: The consolidation-related access right includes subsidiary and associate records.

The proviso to 143(1) gives access to subsidiaries and associates insofar as related to consolidation, not unlimited unrelated records.

Correct answer C: Assess the separate book-entry inquiry; one favourable inquiry result does not answer the others.

Section 143(1)(b) requires inquiry into merely book-entry transactions and prejudice; no automatic criminal conclusion follows.

Correct answer C: The existing auditor continues to be auditor.

Section 139(10) states continuation where no auditor is appointed/reappointed; other legal conditions cannot be inferred away.

Correct answer C: The separately established small-company category exemption is not lost merely because the private numerical route fails.

Guidance 12 distinguishes the category exemption from the separate private route; category status is expressly supplied rather than inferred from old thresholds.

Correct answer B: The public-company relationship condition prevents that specific private exemption.

Order 1(2)(v) requires absence of holding/subsidiary relationship to a public company alongside the numerical conditions.

Correct answer A: The secured-by-deposit label does not itself exclude the bank borrowing from the aggregate test.

Guidance 22 applies the aggregate bank/FI test regardless of secured/unsecured status and specifically addresses overdrafts against deposits.

Correct answer A: Include it in the stated total-revenue test.

Order 1(2)(v) explicitly includes revenue from discontinuing operations; it is not a continuing-only test.

Correct answer C: State the supported basis/reasons for that specific answer clearly.

Paragraph 4 requires the basis; guidance 94 calls for clear reasons rather than a vague conclusion.

Correct answer A: Proper PPE records including quantitative details and situation.

Order 3 (i)(a)(A) concerns record particulars;3 (i)(b) physical verification is a separate reporting question.

Correct answer A: No; the expressly stated duly-executed-in-lessee-favour condition is not established.

Order 3 (i)(c) exception is conditional; a label or use is not evidence that the executed-agreement condition is met.

Correct answer D: A 10 percent decrease; the inclusive class-level specification trigger is met.

Guidance 45 covers upward/downward revaluation and the class-level 10 percent-or-more rule;6/60=10 percent.

Correct answer C: No; the quoted trigger is in excess ofRs 5 crore, not equality.

Order 3 (ii)(b) uses in excess of five crore in aggregate at any point; the supplied equality is below that trigger.

Correct answer D: Read each subclause: the stated(a)/(e) exclusions do not erase all other loan reporting.

The Order states specific principal-business exclusions in (iii)(a)/(e), not an all-subclauses or whole-Order exemption.

Correct answer D: The demand/no-specified-term reporting under (iii)(f).

Order 3 (iii)(f) expressly addresses demand/no-term advances, distinct from overdue and renewal questions.

Correct answer B: Whether the specified cost accounts/records were made and maintained.

Order 3 (vi) concerns specified maintenance; cost-audit applicability is a separate question.

Correct answer A: Report the disputed amount and forum; do not turn the separate late-payment into a dispute merely by grouping them.

Order 3 (vii)(b) requires amount/forum for unpaid disputed dues, distinct from(a) regularity/year-end ageing.

Correct answer A: Assess and report actual diverted amount and alternative purpose; useful business spending alone does not prove sanctioned-purpose use.

Order 3 (ix)(c) focuses on the purpose for which the term loan was obtained, not a generic business-use label.

Correct answer D: Consider the complaint and assess it; unproved does not mean it may be ignored.

The clause requires consideration of received complaints; evidence and opinion judgments remain separate.

Correct answer B: Issues, objections or concerns raised by the outgoing auditors, not merely whether a replacement was appointed.

Order 3 (xviii) requires consideration of outgoing concerns; appointment does not settle them.

Correct answer D: Whether the required special-account transfer under 135(6) occurred, not only earmarking.

Order 3 (xx)(b) concerns the special account; actual transfer evidence and applicable timing must be checked separately.

Correct answer B: Do not omit the component CARO remark solely on group materiality; include the required mapping.

Guidance 91(f) says a component qualification/adverse CARO remark requires reporting even if not material to CFS; required details are company/paragraph mapping.

Correct answer B: This is not a guarantee of future viability or that all liabilities will actually be paid.

Guidance 84(p) limits the statement to facts up to report date and explicitly disclaims future viability/payment guarantees.

Correct answer D: The first class is at 10 percent; do not dilute it by the other class denominator.

Order 3 (ii)(a) uses 10 percent or more for each class;2.5/25=10 percent. Accounting/evidence/opinion effects are separate.