Question

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.

• A. Not disqualified as per Section 141(3) of Companies Act, 2013
• B. Disqualified as per Section 141(3) of Companies Act, 2013
• C. Not disqualified as per Section 140(3) of Companies Act, 2013
• D. Disqualified as per Section - 140(3) of Companies Act, 2013

Hint:

Auditor independence is key for transparent financial reporting.

Answer 1

The Correct Option is B

As per Section 141(3) of the Companies Act, a relative of the CEO cannot act as auditor of a company. Mr. Ram is therefore disqualified.