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Financial Statements of NPO

Special Audit...

Question

Special Audit may be required when the Central Government has reasons to believe __________.

A

that the affairs of the company are not being managed on sound business principles or according to prudent commercial practices.

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B

the company is managed in a manner likely to cause serious injury or damage to the interest of the trade, industry or business to which it pertains.

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C

financial position of the company is such as it might endanger its solvency.

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D

all of the above

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Solution

The correct option is C all of the above
Under Section 233 A of the Companies Act empowered the central government to direct for special audit of a company in certain cases.

The special auditor will have the same powers and duties in relation to the special audit as an auditor of a company is having under section 227.

Looking to the above provision, in given all three reasons the central government may direct to have a special audit.

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