Module: | SEBI LODR & Corporate Governance Frameworks
Q20: Consider the following statements regarding the reporting of fraud by a statutory auditor under Section 143(12) of the Companies Act:
1. A statutory auditor who has reason to believe that a fraud of Rupees 1 Crore or above has been committed against the company must report it to the Central Government in Form ADT-4.
2. The auditor is strictly required to report the suspected fraud to the Central Government even if they are not the first person to discover or identify the fraud.
3. The reporting obligation under this section primarily concerns frauds committed against the company by its own officers or employees.
Which of the above statements is/are correct?
2. The auditor is strictly required to report the suspected fraud to the Central Government even if they are not the first person to discover or identify the fraud.
3. The reporting obligation under this section primarily concerns frauds committed against the company by its own officers or employees.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
D. All statements 1, 2, and 3 are correct.Structural Breakdown: Statement 1 is correct; the threshold is Rs 1 Crore.
Statement 2 is correct.
Statement 3 is correct.
Historical/Related Context: The NFRA tightened interpretations to ensure auditors cannot bypass their reporting duties.
Causal Reasoning: Requiring direct reporting to the government prevents management from burying internal financial crimes.