During the statutory audit of Nova Ltd., the auditor obtains evidence of the following frauds committed by different employees against the company during FY 2026-27:

Employee A diverted ₹58 lakh through 14 separate unauthorised payments.
Employee B diverted ₹42 lakh through 9 separate unauthorised payments.
Employee C diverted ₹31 lakh through 6 separate unauthorised payments.
Employee D diverted ₹27 lakh through 5 separate unauthorised payments.

All the frauds are established to be independent schemes. None of the individual schemes involves ₹1 crore or more.

The audit team argues:

“Since the aggregate amount of fraud is ₹1.58 crore, the auditor must report the frauds to the Central Government under Section 143(12).”

The engagement partner disagrees.

Which ONE of the following is most appropriate?

A. The engagement partner is correct because the ₹1 crore threshold is applied individually to the fraud and cannot be reached merely by aggregating unrelated frauds committed through independent schemes.

B. The audit team is correct because once the aggregate amount of fraud committed against the company exceeds ₹1 crore, Section 143(12) requires reporting to the Central Government irrespective of the amount involved in each fraud.

C. The engagement partner is incorrect because the threshold is applied separately to each payment constituting the fraud, and therefore none of the frauds can ever be reported unless one individual payment exceeds ₹1 crore.

D. The audit team is correct because the threshold is determined by aggregating frauds committed by all officers and employees during the financial year, even when the underlying schemes have no connection with one another.