CA Isha has been appointed as statutory auditor for the financial year 2024-25 by Air Ltd.

CA Isha has been appointed as statutory auditor for the financial year 2024-25 by Air Ltd., which is
on the verge of becoming sick unit and has accumulated losses but the said losses are not equal to
or exceeding its entire net worth as per last audited accounts for the year 2023-24. The audited
accounts for the year 2021-22, 2022-23 were showing liability for payment of undisputed audit
fees payable to predecessor auditors but were settled completely during last F.Y. 2023-24.
In terms of Council General Guidelines, 2008, Chapter VII, read with relevant proviso of the said
Guideline, which of the following statement is correct in respect of the aforesaid scenario?

a) CA Isha shall be deemed to be guilty of professional misconduct as she has accepted the
appointment as auditor of Air Ltd. which had not paid undisputed audit fee for the year 2021-
22 and 2022-23 of predecessor auditor, though settled in F.Y. 2023-24.

b) CA Isha would not be held guilty of professional misconduct as she has accepted the
appointment as auditor of Air Ltd. which is on the verge of becoming sick unit but whose
accumulated losses are not equal to or exceeding its entire net worth as per last audited
accounts for the year 2023-2024.

c) CA Isha would not be held guilty of professional misconduct as she has accepted the
appointment as auditor of Air Ltd., which is not a sick unit, whose accumulated losses are not
equal to or exceeding its entire net worth as per last audited accounts for the year 2023-24
and there are no unpaid undisputed audit fees of predecessor auditors.

d) CA Isha shall be deemed to be guilty of professional misconduct as she has accepted the
appointment as auditor of Air Ltd. which is on the verge of becoming sick unit and it had not
paid undisputed audit fee of predecessor auditor though settled in subsequent year.