Cost and Management Audit · Basics of Cost Audit

Cost Audit Report and Filing Requirements under Section 148

Updated 11 October 2026 · Fact-checked

The cost auditor gives the cost audit report, in Form CRA-3, to the company's Board of Directors. Within thirty days of receiving a copy, the company sends it to the Central Government, filed in Form CRA-4, with full information and explanation on every reservation or qualification. Default attracts penalties through section 147, for both the company and the cost auditor.

Understand Cost Audit Report and Filing Requirements

A cost audit has one end product: the cost audit report. Under section 148(5), the cost auditor submits it to the Board of Directors of the company. It is not sent straight to the Government by the auditor.

The report is prepared in the prescribed form, known as CRA-3. It states the auditor's findings on the cost records, including any reservation or qualification. The auditor must follow the cost auditing standards (section 148(3), second proviso). The cost auditor also cannot be the person appointed as statutory auditor under section 139 (first proviso). The cost audit is in addition to the audit under section 143 (section 148(4)).

The filing duty then moves to the company. Under section 148(6), the company must, within thirty days from receipt of a copy of the report, furnish the Central Government with the report along with full information and explanation on every reservation or qualification in it. In practice this is filed with the Ministry of Corporate Affairs in Form CRA-4, in electronic (XBRL) mode.

The Government may not stop there. Under section 148(7), after reading the report and the company's reply, it may call for further information or explanation. The company must furnish it within the time the Government specifies.

If there is default, section 148(8) applies. The company and every officer in default are punishable as provided in section 147(1). A cost auditor in default is punishable as provided in section 147(2) to (4). Remember who does what: the auditor reports to the Board, and the company files with the Government.

Key rules to remember

Who receives the report: Cost auditor → Board of Directors (section 148(5) proviso); The auditor does not file the report with the Central Government. The company does.
Filing time limit: Last date for filing = date of receipt of copy of the cost audit report + 30 days; Section 148(6). Count from receipt of the copy, not from the year-end or the date of signing.
Content of the company's filing: Report + full information and explanation on every reservation or qualification; Filed with the Central Government, in practice in Form CRA-4. Do not send the report alone.
Further information: Central Government may call for more information; company replies within time specified (section 148(7)); The time is set by the Government, not fixed at thirty days.
Penalty for default: Company and officers in default: section 147(1). Cost auditor in default: section 147(2) to (4). Both via section 148(8); Name the section 147 sub-sections. Quote amounts only if you are sure of them.
Statutory auditor bar: Auditor appointed under section 139 cannot be appointed for cost audit (section 148(3), first proviso); Cost audit is in addition to the section 143 audit (section 148(4)).
Retention of audit file: After the final file is assembled, do not delete or discard documentation before the retention period ends (SCA 102, para 6.16); The cost auditor's file supports the report if it is queried later.

How to solve Cost Audit Report and Filing Requirements questions

Use this order for any question on the cost audit report, its submission or penalties. It keeps your answer tied to the Act and stops you from mixing up the auditor's duty and the company's duty.

1Identify who is acting in the question: the cost auditor, the Board or the company. Each has a different duty.
2State the first step: the cost auditor submits the report, in Form CRA-3, to the Board of Directors (section 148(5) proviso).
3Note the date on which the company received a copy of the report. This is the starting point for the time limit.
4Add thirty days to that date to get the last date for furnishing the report to the Central Government (section 148(6)).
5Check what must be filed: the report plus full information and explanation on every reservation or qualification. Mention Form CRA-4 as the filing form.
6If the question says the Government asked for more details, apply section 148(7): reply within the time the Government specifies.
7If there is delay or non-filing, apply section 148(8): the company and officers in default fall under section 147(1), and a defaulting cost auditor under section 147(2) to (4).
8Close with a one-line conclusion or advice, such as the due date or the action the Board should take.

Quickest way: Three-line filing check

When to use it: Use it in MCQs and short case questions on dates, recipients and penalties, where you have about two minutes.

Recipient: the auditor reports to the Board. The company files with the Central Government.
Clock: thirty days from receipt of the copy by the company. Write the date down and add thirty days.
Attachment and penalty: the filing must carry explanations on every qualification. Default leads to section 147 through section 148(8), with the company and the cost auditor treated separately.

Common mistakes in Cost Audit Report and Filing Requirements

Saying the cost auditor files the report with the Central Government.
Students merge the auditor's job of reporting with the company's job of filing.
Fix: Write the chain: auditor to Board under section 148(5); company to Central Government under section 148(6).
Counting the thirty days from the end of the financial year or from the date the auditor signed.
The statutory auditor's timelines are fresh in memory and get mixed in.
Fix: Count from the date the company receives a copy of the cost audit report, as the Act says.
Forgetting the explanation on qualifications in the filing.
Students treat CRA-4 as just uploading the report.
Fix: Always say: report along with full information and explanation on every reservation or qualification.
Quoting penalty amounts from memory or giving one penalty for everyone.
Section 147 details are half remembered.
Fix: State the structure: the company and officers in default under section 147(1); the cost auditor under section 147(2) to (4). Give amounts only if you are certain.
Appointing the company's statutory auditor as cost auditor in an answer.
Both are called auditors and the roles seem to overlap.
Fix: Recall the first proviso to section 148(3): a person appointed under section 139 cannot do the cost audit. The cost audit is in addition to the section 143 audit.
Ignoring section 148(7) in a case where the Government raises a query.
Students stop at the thirty-day filing.
Fix: Add that the Government may call for more information and the company must reply within the time it specifies.

Worked examples

Example 1

Sundaram Polymers Ltd is covered by cost audit. Its cost auditor submitted the cost audit report to the Board, and the company received a copy on 10 September 2027. The report contains one qualification on the allocation of utilities cost. By what date must the company furnish the report to the Central Government, and what must accompany it?

Show the solution

Under section 148(5) proviso, the report goes to the Board of Directors. The company's thirty-day period under section 148(6) runs from receipt of a copy.
Date of receipt: 10 September 2027.
Add 30 days. September has 30 days, so 20 days take us to 30 September 2027. The remaining 10 days take us to 10 October 2027.
Last date for furnishing: 10 October 2027.
The company must furnish the report along with full information and explanation on every reservation or qualification. So it must explain the utilities cost allocation qualification.
The filing is made in Form CRA-4.

Answer: The company must furnish the report to the Central Government by 10 October 2027, with full information and explanation on the utilities cost qualification.

Example 2

Kaveri Chemicals Ltd did not furnish its cost audit report to the Central Government within the allowed time. Its cost auditor also did not comply with his duties under the section. Explain the consequences under section 148.

Show the solution

Section 148(6) requires the company to furnish the report within thirty days of receiving a copy, with explanations on qualifications.
Failure to do so is a default in complying with section 148, so section 148(8) applies.
For the company and every officer in default: they are punishable as provided in section 147(1), under section 148(8)(a).
For the cost auditor in default: he is punishable as provided in section 147(2) to (4), under section 148(8)(b).
The Central Government can also call for further information under section 148(7), and the company must supply it in the time specified.
Advice: file at once with the explanations, and ensure the cost auditor's file is complete, since documentation must not be discarded before the retention period ends (SCA 102, para 6.16).

Answer: The company and every officer in default are punishable under section 147(1), and the defaulting cost auditor under section 147(2) to (4), as provided by section 148(8). The company should file the report with explanations without further delay.

Exam tips

Draw the chain in one line: auditor to Board to Central Government. Many marks are lost on who files.
In date questions, show the working: date of receipt plus 30 days. Do this even in MCQs.
For penalty questions, quote section 148(8) and section 147 by sub-section. Avoid amounts unless you are sure.
In case scenarios, look for qualifications in the report. If you find one, mention the explanation that must go with the filing.
Mention form names correctly: CRA-3 is the report, CRA-4 is the filing of it with the Government.

Practice questions from Basics of Cost Audit

Cost Audit Report and Filing Requirements in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA IntermediateCost Audit: Meaning, Objectives and Scope

Cost Audit Report and Filing Requirements: frequently asked questions

What is the time limit for submitting the cost audit report to the Central Government?

The company must furnish it within thirty days from the date it receives a copy of the cost audit report (section 148(6)). The period runs from receipt of the copy, not from the year-end.

Who submits the cost audit report, and to whom?

The cost auditor submits the report to the Board of Directors of the company (section 148(5) proviso). The company then furnishes it to the Central Government. In practice this is filed in Form CRA-4.

What is the difference between CRA-3 and CRA-4?

CRA-3 is the form in which the cost auditor prepares the cost audit report. CRA-4 is the form in which the company files that report with the Ministry of Corporate Affairs. Use these names correctly in exam answers.

What is the penalty for default under section 148?

Under section 148(8), the company and every officer in default are punishable as provided in section 147(1). A cost auditor in default is punishable as provided in section 147(2) to (4).

Must the company explain qualifications in the cost audit report?

Yes. The company must furnish the report along with full information and explanation on every reservation or qualification in it (section 148(6)). The Government may also ask for more information under section 148(7).