ee "2018 (wavy Name of the Paper: UNE) + Auditin; 8 & Cor Name of the Course B.Co: porate Govern: Semester or (Hons.) CBcs one ‘Duration : 3 hours Maximum Marks: 75 Attempt AMI questi n questions, All questions carry equal marks efine auditing. Explain bri les of 9.1. (a) Define iB: riefly the princi; auditiny 8 va plain bri principl iting. (b) Discuss the civil and criminal liabilities of See ; ee : ler Companies ns. (a) Auditing and its principles. See Q. 1, Uni Pag Be a ng and its principles. , Unit 1 (civil and Criminal liabilities of Auditors i Bes uditors. See Q. 30, Unit 1, [Pages 32-33 ig) What is the auditor's duty wi i ee Peete ror of your ieee ‘ ith regard to detection of frauds? Cite legal ) An auditor's report may be unqualifie ifi ae De GNEReror ge pauks ec O'uroit) Oatl teaged ‘Auditor's duty with regard to detection of frauds: The auditor's coven regards to detection and prevention of frauds has been largely laid down by various legal decisions and:professional pronouncements, ‘ ; (The judgement in ‘Kingston Cotton Mills Co. comparing the auditor to a/watch-dog’ and not.a’blood-hound’ does not absolve the auditor of his responsibility to conduct a careful checking of business transactions. In fact his responsibility in this regard also extends to areas in which he hhas wo adequate competence, such as valuation of assets or legal mater the case of which he may take the assistance of experts who will be regarded as his agents for the purpose. (ii) The decision given in ‘Westminster Road Construction and Engineering Co! case emphasised adoption of audit procedure confirm the facts stated through management transactions. Thus, ‘widens the scope of an auditor's duty with regards to frauds and errors and lays down more strict standards of reasonable care, (iii) The judgement in ‘Hedley Byrne & Co. Ltd. vs. Heller and Partners Ltd. (Go! reco pnised for the first fime the Tiability of professionals including Pages, company auditors towards third parties. i y [re (i0) More recently similar decision "Caparo’s 1990 Case! has also upheld age the principle of auditor's duty Towards third parties for detection and y aude and errors in case of ReBliEeneS: =r prevention of frauds Pr ids AAS-4 (SA 240) ‘Fraud ane Error issued sy Auditing and Assurant : | by the Institute of Chartered Accountants ot India makes the following points | as to the auditor's responsibility for detection of material) mis-statement in the ere fe eem nie cue to.fraudiand ot (i Prevention and detection of fraud ani Management. error is the responsibility of the 145 SeCORPORATE GOVERNANCE 2018 (MAY-JUNE) 147 sade by the whistleblower should be han .. Many, large-scale corporations’ frauds ha eee whi leblowing. It is imperative for every eae a ent Mmprenensive whistleblowing policy in pee hey continuous trust and support from all parents Pee sides there has been development of Corporate Soci ea\asumer activism and sustainable working life h oes {0 focus more on ethical issues. Therefore, whistleblo od snd justified in order to preserve organisation and publi eee chan Ngee of sistleloving that may accrue are a ol neues ad share confidence from all stakeholders, aes : ‘of organisation to certain type of ri i Pr i type of risks such as malpractices, 4s interests of stakeholders. ‘effective fulfillment of Corporate Social Responsibility. ts legal action against the organisation. : snisations want to be seen as responsible parts of society and t! ‘bited in the mission, goals, strategies el reports of a a Joyalty of whistleblower is to report ‘behaviour that departs from the ion of the organisation. The employee is seen to be loyal to the ission and goals and not to hierarchy or positions. older Activism. See Q. 36, Unit II. Or riefly explain the corporate governance reforms in Indi. 8 it are the different benefits of adopting ethics in business? W “The initiatives for Corporate Governance Reforms in India have come the Government at macro level to strengthen the industrial capabilities firms and the companies themselves at the micro Jevel to compete ith their foreign counterparts. A evolved a wide range of jnstitutional and corporate initiatives in governance reforms which includes greater transparency, higher of information disclosures, reforming company board structure and al system and reforming governance mechanism of financial institutions. ‘the Initiatives are: a : 41 Market Regulations. ‘The Securities and Exchange Board of India g been responsible for a large proportion of initiatives aimed at ‘etter governance for Shareholders and in developing efficient capital EE EENEDE F Zz = a SEE. [Page 81 SEBI in this respect have been the introduction teria for public offers, declaration of yesults, mandatory appointment of compliance officer, fs, modernization of market microstructures and tions for mergers and takeovers. ais enacted in recent years include: ‘Trading Rules 1992); lations 1993; Regulations 1994; Treasures instituted by SEY mms, strict entry point crit 7 (Insider + SEBI (underwriters) Rept 1 Spl Bankers fo an Issue)reality and. jottom line is that it cial Stewardship Elkington’s 7 i , | coneor Of selling some190(182) * SHIV DAS DELHI UNIVERSITY SERIES The 2015 Regulations are applicable to any entity (whet x g the stock exchange, for listing equity shares institutional trading Platforms), debt securities of rd, § as Preference, ME Teceipts, securitized debt instruments, mutual fund uni = ates, may be specified by SEBI. Mie, and othe, sition of Board of Directors under LODR for listed Board of Directors shall have an optimum combination of ey, Monexecutive directors with at least one woman dices and than fifty percent of the board of directors shall compra nonene ie directors. ther & compan (0M main pa Oy companies, ided that the Board of directors of th ‘independent woman director by A p 1000 listed entities shall have at least 2020 top 500 listed entitic 1, 2019 and the Bo, One independent 8 shall ha ard of direon woman direc Ve ay ere the chairperson of the board of directors is a n ector, at least one-third of the board of directors sh, f independent directors and where the listed entity does at non-executive chairperson, at least half of the boar omprise of independent directors ere the non-executive chairperson is a promoter of the listed en. to any promoter or person occupying management positions d of director or at one level below the Board of Directors, t lirectors of the listed entity shall consist of Independent ON-eXeCutive all. comprise 8 not have » dof directors ectors of the top 1000 listed entities (with effect from and the top 2000 listed entities (with effect from April, e of not less than six directors. ittees under Companies Act, 2013 and SEBI (LODR) position of Audit Committee, Nomination and Rem- eholder Relationship Committee, Corporate Social d Risk Management Committee under Compariss lations, 2015 with relevant Terms and Conditions as members, a Directors or Majority of the members sho" ttee will be Independent Director, members must have ability to read a the Secretary to the Audit canis shall invite the Finance dren i al audit and a represen! a such executives to be presSHIV DAS DELHI UNIVERSITY SERIES discussion with internal auditors of St z any signif f the findings of any internal auditors of a a nan any intemal investigation, Sean regularity o1 i i ach mate age (Busty oF a failure of inne oad the cause behind Substantial defaults i *bentureholders, Shareholders and Creditors = the adequacy of internal audit function, audit department, staffing and seniority verage of reporting structure and frequency ie functioning of the whistle blower mechanism, appointment of CFO (Chief Financial Officer) ns of the applicant, function as provided under the terms of zefrey ‘ae joans and/or holding company in a subsidy es or 10% of the asset size of the subsidi existing loans/advances/ investments, ittee will be Independent Director, ers must have the ability to read ad the Secretary to the Audit commit shall invite the Finance. aie ‘3 audit and a representative: res to be present at the meeting>shonizatio izatio mn shorsial Reporting nal Check and Irnen . fossil fuel t rental consciou es ut promoting equity in so n ‘expected to allow ntee equality of outcome itiatives and values. But, all of the nd expl tenden in. Thi ns thi