Cost and Management Audit · Companies (Cost Records and Audit) Rules, 2014

Cost Audit Report and Form CRA-3 Explained

Updated 11 October 2026 · Fact-checked

The cost audit report is the cost auditor's written opinion on the company's cost records, given in Form CRA-3 with annexures. The auditor submits it to the Board within 180 days of the financial year end. The company then files it with the Central Government in Form CRA-4 within 30 days of receiving it, with an explanation of every reservation.

Understand Cost Audit Report and Form CRA-3

Section 148 of the Companies Act, 2013 lets the Central Government order an audit of cost records for prescribed classes of companies. The cost auditor is a cost accountant appointed by the Board. The audit ends with a report, and that report is what the Government, the Board and other users rely on.

The prescribed form for the report is Form CRA-3. It has the auditor's report and annexures with the cost data. The report states whether the auditor got the information needed, whether proper cost records were kept, and whether the records give a true and fair view of cost. It also states the auditor's observations, suggestions and any qualifications or reservations.

The law says who receives the report. Under section 148(5), the report goes to the Board of Directors, not to the members or the Government. The auditor does not file it with the Government. The company does.

Under section 148(6), the company must furnish the report to the Central Government within thirty days from the date it receives a copy. It must include full information and explanation on every reservation or qualification. This filing is done in Form CRA-4. If the Government wants more detail, section 148(7) lets it call for further information, and the company must give it within the time specified.

The auditor must follow the cost auditing standards issued by the Institute of Cost Accountants of India with Central Government approval (section 148(3), second proviso). A cost audit is also in addition to the audit under section 143 (section 148(4)). Default can be punished under section 148(8): the company and officers in default under section 147(1), and the cost auditor under section 147(2) to (4).

Key rules to remember

Who submits the report to whom: Cost auditor → Board of Directors (Form CRA-3); Company → Central Government (Form CRA-4); Section 148(5) proviso: the report is submitted to the Board. Section 148(6): the company furnishes it to the Government.
Time limit for CRA-3: Cost auditor submits CRA-3 within 180 days from the end of the financial year; Rule under the Companies (Cost Records and Audit) Rules, 2014. Count 180 days from the year end, not from the date of appointment.
Time limit for CRA-4: Company files CRA-4 within 30 days from the date of receipt of a copy of the cost audit report; Section 148(6). The 30 days run from receipt by the company, not from the year end.
Content of filing: Report + full information and explanation on every reservation or qualification; Section 148(6). Silence on a qualification is a defect in the filing.
Standards to follow: Cost auditor must comply with cost auditing standards; Second proviso to section 148(3). Standards are issued by the Institute of Cost Accountants of India with Central Government approval.
Relationship with statutory audit: Cost audit is in addition to the section 143 audit; Section 148(4). A person appointed as statutory auditor under section 139 cannot be appointed cost auditor (first proviso to 148(3)).
Further information: Central Government may call for further information; company furnishes it within the time specified; Section 148(7).

How to solve Cost Audit Report and Form CRA-3 questions

Use this method for any question on the cost audit report, CRA-3, CRA-4 or the cost auditor's reporting duties.

1Identify what is asked: content of the report, who submits, a deadline, or the treatment of a qualification.
2Name the legal basis: section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014. Do not quote a section number unless you are sure of it.
3Fix the two-stage flow. Auditor to Board in CRA-3, then company to Central Government in CRA-4.
4Apply the right clock. 180 days from the financial year end for CRA-3. 30 days from receipt of the report for CRA-4. Compute actual dates.
5Cover the content of the report: whether information was obtained, whether proper cost records were kept, true and fair view, observations and suggestions, and qualifications or reservations, with annexures.
6Deal with reservations. State that the auditor reports them and the company must give full information and explanation to the Government.
7State the consequence of default under section 148(8) and end with a clear conclusion for the case.

Quickest way: Two clocks, two forms, two recipients

When to use it: Use this for MCQs and for short case questions that ask about timelines or filing.

Write 'CRA-3: auditor to Board, 180 days from year end'.
Write 'CRA-4: company to Government, 30 days from receipt'.
Check the date given in the question: is it a year end or a receipt date?
Add the days and answer with the actual date.
If a qualification exists, add that the company must explain it fully in the filing.

Common mistakes in Cost Audit Report and Form CRA-3

Saying the cost auditor files the report with the Central Government.
Students merge CRA-3 and CRA-4 into one step.
Fix: Remember the proviso to section 148(5): the auditor reports to the Board. Section 148(6) puts the filing duty on the company.
Counting the 30 days for CRA-4 from the financial year end.
The 180-day limit is also counted from the year end, so the clocks get confused.
Fix: CRA-4 runs from the date the company receives a copy of the report. Underline the trigger date in the question.
Counting the 180 days from the date of appointment of the cost auditor.
Students think of the limit as an engagement deadline.
Fix: The 180 days run from the end of the financial year to which the report relates.
Ignoring reservations or qualifications in the filing.
Students treat filing as a formality.
Fix: Section 148(6) requires full information and explanation on every reservation or qualification. Mention it in every answer on CRA-4.
Thinking the cost audit replaces the statutory audit.
Both are called audits of the company.
Fix: Section 148(4) says it is in addition to the section 143 audit, and the statutory auditor cannot be the cost auditor.
Writing the report without reference to cost auditing standards.
Students focus on the form and forget the compliance duty.
Fix: State that the auditor must comply with cost auditing standards under the second proviso to section 148(3).

Worked examples

Example 1

Surya Chemicals Ltd is covered by cost audit for the financial year 2025-26, which ended on 31 March 2026. Find the last date by which the cost auditor must submit Form CRA-3 to the Board. The auditor submitted the report on 20 September 2026 and the company received it the same day. By what date must the company file Form CRA-4?

Show the solution

The limit for CRA-3 is 180 days from the end of the financial year. Counting from 31 March 2026: April 30, May 31, June 30, July 31, August 31 gives 153 days up to 31 August 2026.
The remaining 27 days run to 27 September 2026. So CRA-3 is due by 27 September 2026.
The report was submitted on 20 September 2026, so it is within time.
CRA-4 is due within 30 days from receipt. Receipt was on 20 September 2026.
September has 30 days. 10 days remain in September after 20 September, so 20 more days run into October. The date is 20 October 2026.

Answer: CRA-3 is due by 27 September 2026 (submitted in time on 20 September). CRA-4 must be filed by 20 October 2026, with full information and explanation on every reservation or qualification.

Example 2

The cost auditor of Bharat Auto Components Ltd has made a qualification in the cost audit report about inadequate allocation of overheads. The managing director says the company need not mention it when filing with the Government as the Board has already seen the report. Advise.

Show the solution

The cost auditor reports to the Board under the proviso to section 148(5). Giving the report to the Board is a different step from filing with the Government.
Section 148(6) requires the company to furnish the report to the Central Government within 30 days of receiving a copy, in Form CRA-4.
The same sub-section requires full information and explanation on every reservation or qualification in the report.
So the overhead-allocation qualification must be explained in the filing. The Board's knowledge does not remove this duty.
Section 148(7) lets the Government ask for more information, and the company must supply it in the time specified.
If the company defaults, section 148(8)(a) makes the company and officers in default punishable as provided in section 147(1).

Answer: The managing director is wrong. The company must file Form CRA-4 within 30 days of receiving the report and give full information and explanation on the qualification. Default attracts the penalty under section 148(8).

Exam tips

Practise date computations. Examiners like a year end or receipt date followed by a question on the due date.
In case-based MCQs, check who acts: auditor to Board, or company to Government.
Always link a qualification in the report to the company's duty to explain it in CRA-4.
Cite section 148 sub-sections only where you are sure (3, 4, 5, 6, 7, 8 as in the Act); otherwise say 'the Rules'.
In written answers, close with a recommendation or conclusion for the case, not just a list of rules.

Practice questions from Companies (Cost Records and Audit) Rules, 2014

Cost Audit Report and Form CRA-3 in other exams

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

CS ProfessionalTypes and Forms of Internal Audit Reports

Cost Audit Report and Form CRA-3: frequently asked questions

What is Form CRA-3?

It is the prescribed form in which the cost auditor gives the cost audit report, with annexures, to the Board of Directors. It covers the auditor's findings, observations and any qualifications on the cost records.

What is the time limit for filing Form CRA-4?

The company must furnish the cost audit report to the Central Government within 30 days from the date it receives a copy of the report (section 148(6)). The filing is made in Form CRA-4 with full information and explanation on every reservation or qualification.

Who submits the cost audit report to the Central Government?

The company does. The cost auditor submits the report to the Board of Directors under section 148(5). The company then furnishes it to the Government under section 148(6).

Can the statutory auditor also do the cost audit?

No. The first proviso to section 148(3) says no person appointed under section 139 as the company's auditor can be appointed to audit cost records. The cost audit is also in addition to the section 143 audit.