The engagement partner CA B, while evaluating and reporting on the designs and efficiency of internal financial controls at GHB Ltd., also…

CA Intermediate · Auditing and Ethics · PYQS · May 2026
The engagement partner CA B, while evaluating and reporting on the designs and efficiency of internal financial controls at GHB Ltd., also highlighted to the directors, independent directors and the audit committee the manner in which the Companies Act, 2013 places greater emphasis on the effective implementation and reporting on the internal control of a company. With reference to reporting on the internal financial controls system under the Companies Act, 2013, which of the following statements does not fall within the nature of responsibility of GHB Ltd.?
(A) (A) In accordance with the terms of reference specified in writing by the Board, act of every audit committee to include evaluation of internal financial controls and risk management systems.
(B) (B) Director's responsibility statement to state that the Director has laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(C) (C) Board of Directors have to appoint an expert to state that the internal financial controls of the company are commensurate with the size and nature of its business.
(D) (D) In terms of code for Independent Directors, independent directors to get themselves satisfied that financial controls and systems of risk management are robust and defensible.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

(C) Board of Directors have to appoint an expert to state that the internal financial controls of the company are commensurate with the size and nature of its business.

Topics: Risk Assessment and Internal Control

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