Chapter Exam

Chapter 8: Qualifications Rights and Duties of Auditor — Online MCQ Test

Q: Who is eligible to be appointed as an auditor of a company under the Companies Act?

Answer: A. Only a chartered accountant in practice — A company auditor must generally be a chartered accountant in practice. This is the basic statutory qualification for appointment.

Q: Which of the following is a disqualification for appointment as an auditor?

Answer: B. Holding shares in the company — A person who holds shares in the company is disqualified from acting as its auditor due to lack of independence.

Q: An auditor discovers that he has become disqualified after appointment. What is the correct action?

Answer: C. Cease to act as auditor and inform the company — If an auditor becomes disqualified after appointment, he should stop acting as auditor and notify the company.

Q: Which of the following is the best answer for the blank: An auditor’s report is addressed to the ______.

Answer: B. Members of the company — The auditor’s report is primarily addressed to the members/shareholders of the company, since they are the owners of the company.

AUDITING · CLASS 12th · Tamil Nadu State Board

Practice Chapter 8: Qualifications Rights and Duties of Auditor with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th AUDITING. This chapter covers: Focusing on statutory requirements under Company Law this chapter details auditor qualifications disqualifications appointment removal and resignation procedures. It covers auditor.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 8: Qualifications Rights and Duties of Auditor — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th AUDITING — Chapter 8: Qualifications Rights and Duties of Auditor, with answers and explanations. These are sample questions; the exam has its own separate question set.

Who is eligible to be appointed as an auditor of a company under the Companies Act?

A. Only a chartered accountant in practice ✓
B. Any commerce graduate
C. Any company secretary
D. Any person approved by the directors

Answer: A. Only a chartered accountant in practice
A company auditor must generally be a chartered accountant in practice. This is the basic statutory qualification for appointment.

Which of the following is a disqualification for appointment as an auditor?

A. Being a chartered accountant in practice
B. Holding shares in the company ✓
C. Having experience in auditing
D. Being an independent professional

Answer: B. Holding shares in the company
A person who holds shares in the company is disqualified from acting as its auditor due to lack of independence.

An auditor discovers that he has become disqualified after appointment. What is the correct action?

A. Continue until the next AGM
B. Ignore the disqualification if the company agrees
C. Cease to act as auditor and inform the company ✓
D. Transfer the audit to an assistant

Answer: C. Cease to act as auditor and inform the company
If an auditor becomes disqualified after appointment, he should stop acting as auditor and notify the company.

A company auditor resigns before completion of the term. Which statement is correct?

A. He need not give any reason for resignation
B. He must send a written resignation and fulfill statutory requirements ✓
C. He can resign only with the approval of the employees
D. He may resign only after the AGM is over

Answer: B. He must send a written resignation and fulfill statutory requirements
An auditor must resign by following the prescribed procedure, usually including a written notice and compliance with statutory reporting requirements.

Which of the following is the best answer for the blank: An auditor’s report is addressed to the ______.

A. Board of Directors only
B. Members of the company ✓
C. Company employees
D. Registrar of Companies only

Answer: B. Members of the company
The auditor’s report is primarily addressed to the members/shareholders of the company, since they are the owners of the company.