Mr. Suraj reported, under Clause 3(A)(III) of Master Direction - Non-Banking Financial Companies Auditor's Report (Reserve Bank) Directions, 2016,…
CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · September 2025
Mr. Suraj reported, under Clause 3(A)(III) of Master Direction - Non-Banking Financial Companies Auditor's Report (Reserve Bank) Directions, 2016, that Alpha Limited is not eligible to hold its Certificate of Registration under section 45-IA of the RBI Act, as during the year the Net Owned Funds went below the minimum required limit. Management of the NBFC had a different opinion that a certificate pertaining to the Net Owned Funds from the statutory auditor is required with reference to the position of the Company as at 31st March and not based on each month's position. Kindly guide Mr. Suraj with respect to the requirement under Master Direction.
Suggested Answer and Working Notes:
Correct Answer: Option (B)
Every NBFC shall submit a certificate from its statutory auditor that it is eligible to hold a Certificate of Registration under section 45-IA of the RBI Act. Such a certificate should be with reference to the position of the company as at 31st March.
Topics: Professional Ethics & Liabilities of Auditors
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