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.
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.
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Auditor independence is key for transparent financial reporting.
Updated On: Sep 18, 2025
- Not disqualified as per Section 141(3) of Companies Act, 2013
- Disqualified as per Section 141(3) of Companies Act, 2013
- Not disqualified as per Section 140(3) of Companies Act, 2013
- Disqualified as per Section - 140(3) of Companies Act, 2013
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The Correct Option is B
Solution and Explanation
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.
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