Companies Act

Test your knowledge on the Companies Act, 2013 and the reporting requirements for internal financial controls with this informative quiz. Learn about the expanded scope of internal controls and the responsibilities of auditors and directors in ensuring the adequacy and effectiveness of these controls. Challenge yourself to understand the nuances of the reporting requirements and stay up-to-date on the latest regulations. This quiz is perfect for auditors, directors, and anyone interested in the financial workings of a company.

Created by

@PrettyJoy

Questions and Answers

What is the responsibility of management regarding internal financial controls?

They are responsible for ensuring all aspects of the company's operations have adequate internal controls.

What is the requirement of directors regarding internal financial controls?

They must state that internal financial controls are adequate and operating effectively.

What is included in internal financial controls?

All of the above

What is the expanded scope of internal controls under the Companies Act of 2013?

<p>Covering all aspects of a company's operations.</p> Signup and view all the answers

What is the reporting requirement under the Companies (Auditor’s Report) Order, 2015?

<p>No reporting requirement on internal financial controls.</p> Signup and view all the answers

Study Notes

Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 requires auditors to report on the adequacy and effectiveness of internal financial controls.
The scope for reporting on internal financial controls is wider than the reporting under the Companies (Auditor’s Report) Order, 2015.
Management of companies are responsible for ensuring all aspects of the company's operations have adequate internal controls.
Clause (e) of Sub-section 5 of Section 134 requires directors to state that internal financial controls are adequate and operating effectively.
Internal financial controls include policies and procedures for orderly and efficient business conduct, adherence to company policies, safeguarding assets, fraud and error prevention and detection, accurate accounting records, and timely preparation of financial information.
Rule 8(5)(viii) of the Companies (Accounts) Rules, 2014 requires the Board of Directors' report to state details on the adequacy of internal financial controls.
The requirement for directors to state that they have taken proper and sufficient care for accounting records and asset safeguarding is in addition to the requirement for internal financial control reporting.
Auditors are responsible for reporting on the effectiveness of internal financial controls.
The Companies Act of 2013 has expanded the scope of internal controls to cover all aspects of a company's operations.
The Companies (Auditor’s Report) Order, 2015 does not require reporting on all controls relating to financial reporting or the adequacy and operating effectiveness of such controls.