Para 2.5.11 — MSO (Audit)
Original Rule Text
2.5.11 The detailed audit of Government Companies and deemed Government Companies is conducted by statutory auditors appointed under the Companies Act by the Comptroller and Auditor General. He can also issue directions to the statutory auditors for conduct of audit, scrutinise their reports and perform supplementary or test audit.
# Audit Arrangements
What This Means
The detailed audit of government companies and deemed government companies is carried out by statutory auditors who are appointed under the Companies Act by the CAG. The CAG has additional powers: he can issue directions to these statutory auditors on how to conduct the audit, he can scrutinize their audit reports for completeness and accuracy, and he can perform supplementary or test audits to check areas the statutory auditors may have missed.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Statutory auditors are appointed by the CAG under the Companies Act for government company audits
- 2CAG can issue directions to statutory auditors on how to conduct the audit
- 3CAG can scrutinize the statutory auditors' reports for completeness
- 4CAG can perform supplementary or test audit over and above the statutory audit
- 5This three-layered approach ensures comprehensive oversight of government company finances
Practical Example
The CAG appoints a chartered accountancy firm as the statutory auditor for a central government PSU. Before the audit begins, the Principal Director of Commercial Audit issues sub-directions highlighting areas like related-party transactions and capital expenditure overruns that need special attention. After the statutory auditor submits their report, the CAG's office conducts a supplementary audit and discovers that the statutory auditor missed a significant case of window-dressing in the inventory valuation.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Who appoints the statutory auditors for government companies?▼
What is the difference between statutory audit and supplementary audit?▼
Can the CAG override the statutory auditor's findings?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.