Audit of Government Companies — Section 143(5) to 143(7)
# Audit of Government Companies
## Appointment
The Comptroller and Auditor-General of India (C&AG) shall appoint the auditor of a Government Company (Sec 139(5)).
## Powers of C&AG
1. Direct the manner in which the accounts of the Government company are to be audited.
2. The auditor submits a copy of the audit report to the C&AG, including directions issued, action taken, and impact on accounts.
## Supplementary Audit — Sec 143(6)
The C&AG, within 60 days from receipt of the audit report, has the right to:
### (a) Conduct a Supplementary Audit
Conduct supplementary audit of the financial statements by any person authorised by him.
Require information/additional information from any person.
### (b) Comment Upon or Supplement the Audit Report
Such comments/supplement shall be sent by the company to every person entitled to copies of the audited financial statements.
Placed before the AGM at the same time and in the same manner.
## Test Audit — Sec 143(7)
The C&AG may, if he considers necessary, order a test audit of the books of accounts of the Government company.
Provisions of Sec 19A of the C&AG Act, 1971 shall apply.
## Timeline Diagram
```
Auditor's Report → submitted to C&AG
↓
C&AG (within 60 days)
├── Supplementary Audit by authorised person
└── Comment / supplement on auditor's report → sent to members + placed at AGM
```
Worked example
### Example 1
Q: GNL Ltd is a Government Company. Who appoints its auditor?
A: The C&AG appoints the auditor of GNL Ltd within 180 days from commencement of the financial year (Sec 139(5)). Auditor holds office till conclusion of AGM.
### Example 2
Q: The C&AG, after receiving the audit report of a Government company, wishes to conduct a supplementary audit. State time and manner.
A: Under Sec 143(6), the C&AG must act within 60 days of receipt. He may conduct supplementary audit through any authorised person and require information. Comments are sent to every person entitled to FS and placed at AGM.
⚠️ Common exam mistakes
Stating shareholders appoint the auditor of a Government company — appointment is by C&AG.
Confusing 'supplementary audit' (within 60 days) with 'test audit' (at C&AG's discretion, no fixed timeline).
Forgetting that C&AG's comments/supplement must be circulated to members AND tabled at AGM.
Bare-Act text Section 143(5), (6), (7) · Companies Act, 2013 · click to expand
Section 143(5), (6), (7) — In the case of a Government company, the Comptroller and Auditor-General of India shall appoint the auditor under sub-section (5) or sub-section (7) of Section 139 and direct the auditor the manner in which the accounts of the Government company are required to be audited. The auditor shall submit a copy of the audit report to the C&AG. The C&AG shall within 60 days from receipt have the right to (a) conduct a supplementary audit by such person as authorised; (b) comment upon or supplement such audit report. Any comments given by the C&AG shall be sent by the company to every person entitled to copies of audited financial statements and shall also be placed before AGM. The C&AG may, by an order, cause test audit to be conducted.