M/s MNO & Co. (a CA firm with 3 partners) are the statutory auditors  PCL Limited, a company engaged in real estate business. PCL Limited recently launched a real estate project in Bangalore Whitefield location at an all- inclusive price of Rs 5,500. PCL Limited also announced that their first 50 customers would be allowed a special inauguration discount of 10%. Mr. M, one of the partners with MNO & Co. and the audit engagement partner for PCL Limited booked one 3 BHK flat and he was offered the all- inclusive price of Rs 4,950 (after 10% inauguration discount). Another partner- Mr. N also booked one 3 BHK flat at the all- inclusive price of Rs 5,500. Which of the following statements is correct:

(a) M/s MNO & Co., being the auditors shall not suffer any disqualification on account of such business transaction by Mr. M with audit client since Mr. N was not offered any discount in the booking price.

(b) M/s MNO & Co., being the auditors shall not suffer any disqualification on account of such business transactions by Mr. M and Mr. N with PCL Limited since the third partner- Mr. O had not done any business transaction with PCL Limited.

(c) M/s MNO & Co., being the auditors shall not suffer any disqualification on account of such business transactions by Mr. M and Mr. N with audit client since business transactions with audit client in the ordinary course of business, are allowed, without any consideration on transaction price.

(d) M/s MNO & Co., being the auditors shall not suffer any disqualification on account of such business transaction by Mr. M with audit client if Mr. M qualified as among the first 50 eligible customers as per the marketing scheme and it can be demonstrated that PCL Limited has passed on similar 10% inauguration discount to other 49 customers and further, the discount of 10% offered to Mr. M was in the nature of routine commercial transaction, in the ordinary course of business of PCL Limited.






























(d) M/s MNO & Co., being the auditors shall not suffer any disqualification on account of such business transaction by Mr. M with audit client if Mr. M qualified as among the first 50 eligible customers as per the marketing scheme and it can be demonstrated that PCL Limited has passed on similar 10% inauguration discount to other 49 customers and further, the discount of 10% offered to Mr. M was in the nature of routine commercial transaction, in the ordinary course of business of PCL Limited.



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