Cost and Management Audit · Cost Auditor

Rights, Duties and Powers of Cost Auditor under Section 148

Updated 11 October 2026 · Fact-checked

Under Section 148 of the Companies Act, 2013, a cost auditor has the rights, duties and obligations of a company auditor, so far as applicable. The company must give all assistance and facilities. The cost auditor reports to the Board, and the company sends the report to the Central Government within thirty days of receiving it.

Understand Rights, Duties and Powers of Cost Auditor

A cost audit is a statutory audit of cost records. It is separate from the financial audit. Section 148(4) says it is in addition to the audit under section 143. So the cost auditor does not replace the statutory auditor.

Section 148(5) is the key provision for this topic. It says the qualifications, disqualifications, rights, duties and obligations that apply to auditors under the Chapter shall, so far as may be applicable, apply to a cost auditor. In practice, the cost auditor gets the same kind of access and the same kind of responsibility as a company auditor, adapted to cost records.

The same sub-section puts a duty on the company: it must give all assistance and facilities to the cost auditor for auditing the cost records. If you are asked about the rights of a cost auditor, think of this as the other side of the coin.

The reporting chain has two steps. First, the cost auditor submits the report on the audit of cost records to the Board of Directors, not to the Central Government. Second, under Section 148(6), the company furnishes a copy to the Central Government within thirty days of receiving it, with full information and explanation on every reservation or qualification. Under Section 148(7), the Central Government may call for further information, and the company must give it within the time specified.

Default has consequences. Under Section 148(8), the company and its officers 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). The cost auditor must also comply with the cost auditing standards issued by the Institute of Cost Accountants of India with Central Government approval.

Key rules to remember

Rights and duties of a cost auditor: Section 148(5): auditor's qualifications, disqualifications, rights, duties and obligations apply to a cost auditor, so far as applicable; This is how a cost auditor gets rights such as access to records. Say 'so far as may be applicable' in your answer.
Company's duty to the cost auditor: Company must give all assistance and facilities to the cost auditor (Section 148(5)); Use this to answer questions on obstruction or non-cooperation.
Whom the cost auditor reports to: Cost auditor → Board of Directors (proviso to Section 148(5)); The report goes to the Board, not directly to the Central Government.
Company's filing duty: Within 30 days of receiving the cost audit report: furnish to Central Government with full information and explanation on every reservation or qualification (Section 148(6)); The 30 days run from the company's receipt of the report. The duty is on the company.
Further information: Central Government may call for further information; company furnishes within time specified (Section 148(7)); Applies after the Government has considered the report and the company's explanation.
Relation to financial audit: Cost audit is in addition to the section 143 audit (Section 148(4)); The cost auditor must not be the company's section 139 auditor (first proviso to Section 148(3)).
Standards: Cost auditor must comply with the cost auditing standards (second proviso to Section 148(3)); These standards are issued by the Institute of Cost Accountants of India with Central Government approval.
Penalty for default: Company and officers in default: as in section 147(1). Cost auditor in default: as in section 147(2) to (4) (Section 148(8)); Do not quote amounts unless the question gives them.

How to solve Rights, Duties and Powers of Cost Auditor questions

Use this method for any question on the rights, duties or powers of a cost auditor.

1Identify what is asked: a right, a duty of the cost auditor, a duty of the company, or a consequence of default.
2Quote the base provision: Section 148(5) for rights and duties, applied 'so far as may be applicable'.
3List the specific rights that follow from the company auditor's position: access to books and records, and the right to seek information and explanation. State them in plain words.
4Add the company's duty to give all assistance and facilities.
5Trace the reporting chain in order: cost auditor to Board, then company to Central Government within thirty days, with explanation of every reservation or qualification.
6Add the compliance duties: cost auditing standards, and no appointment of the section 139 auditor as cost auditor.
7If the case involves default, apply Section 148(8) and name who is liable.
8Close with a one-line conclusion that answers the facts given.

Quickest way: Who, to whom, within when

When to use it: Use this for short answers and MCQs where you must decide who must do what.

Ask: is the actor the cost auditor, the Board, the company or the Central Government?
Match the actor to the action: auditor reports to Board; company files with Central Government in 30 days; Government may ask for more.
Check the clock: 30 days starts when the company receives the report.
Check default: company and officers go to section 147(1); cost auditor goes to section 147(2) to (4).
Eliminate any option that sends the report straight from the auditor to the Government or that says the audit replaces the section 143 audit.

Common mistakes in Rights, Duties and Powers of Cost Auditor

Saying the cost auditor submits the report to the Central Government.
Students link cost audit with the Government and skip the Board step.
Fix: Write the chain: cost auditor to Board, then company to Central Government within thirty days of receipt.
Counting the thirty days from the balance sheet date or the end of the audit.
Students mix this with other filing deadlines.
Fix: Section 148(6) counts from the date the company receives a copy of the cost audit report.
Listing rights of a cost auditor with no link to the Act.
Students recall rights from company audit and forget the bridge.
Fix: Start with Section 148(5): the auditor's rights and duties apply so far as applicable.
Thinking the cost audit replaces the financial audit.
Both are called audits of the same company.
Fix: Quote Section 148(4): it is in addition to the section 143 audit.
Forgetting that the company must explain every reservation or qualification.
Students focus on filing the report and miss the content of the filing.
Fix: State that the report goes with full information and explanation on every reservation or qualification.
Naming only the company as liable for default.
Students read Section 148(8) too quickly.
Fix: Name both: the company and officers in default, and separately the cost auditor in default.

Worked examples

Example 1

Aarav Components Ltd is covered by a cost audit direction. The company's finance head refuses to let the cost auditor see the production cost sheets, saying the financial auditor has already checked the accounts. Advise the cost auditor.

Show the solution

Section 148(4) makes the cost audit additional to the section 143 audit. The financial auditor's work does not remove the need for a cost audit.
Section 148(5) applies the rights and duties of auditors to a cost auditor, so far as applicable. This includes access to the books and records needed for the cost audit.
The same sub-section makes it the company's duty to give all assistance and facilities to the cost auditor.
Refusal is a default in complying with Section 148. Under Section 148(8), the company and every officer in default are punishable as provided in section 147(1).
Advice: ask in writing for the cost sheets, record the refusal on the audit file, and comply with the cost auditing standards on the effect of any limitation on the report.

Answer: The refusal is not valid. The cost audit is in addition to the financial audit, and the cost auditor is entitled to access and to the company's assistance under Section 148(5). The company and officers in default are liable under Section 148(8) read with section 147(1).

Example 2

The cost auditor of Bharat Metals Ltd gives the cost audit report to the Board on 10 March. The report has one qualification. Explain what the company must do and by when.

Show the solution

The report is submitted by the cost auditor to the Board of Directors under the proviso to Section 148(5).
The thirty-day period in Section 148(6) starts from the date the company receives a copy of the report. On the facts, take receipt as 10 March.
Thirty days from 10 March ends on 9 April.
The company must furnish the report to the Central Government by 9 April, with full information and explanation on every reservation or qualification. Here it must explain the one qualification.
If the Central Government asks for more information under Section 148(7), the company must furnish it within the time the Government specifies.
Failure to comply is a default under Section 148(8), and the company and officers in default are punishable as provided in section 147(1).

Answer: The company must furnish the report to the Central Government within thirty days of receipt, that is by 9 April, with full information and explanation on the qualification. It must also answer any further request under Section 148(7) in the time specified.

Exam tips

In theory answers, always cite Section 148(5) for rights and duties and add 'so far as may be applicable'.
For case questions, first ask who has defaulted, then apply Section 148(8) to that person.
In MCQs, watch for options that skip the Board or change the thirty-day period. The Act says thirty days from receipt.
Do not quote form numbers, penalty amounts or filing portals unless the question gives them. Use the Act's wording where you can.
Link the topic to appointment rules: the section 139 auditor cannot be the cost auditor, and the cost auditor must follow cost auditing standards.

Practice questions from Cost Auditor

Rights, Duties and Powers of Cost Auditor in other exams

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

Rights, Duties and Powers of Cost Auditor: frequently asked questions

What are the rights of a cost auditor under Section 148?

Section 148(5) applies the qualifications, disqualifications, rights, duties and obligations of auditors under the Chapter to a cost auditor, so far as applicable. The company must also give all assistance and facilities for auditing its cost records. Access to records and the right to seek information and explanation come through this route.

To whom does the cost auditor submit the cost audit report?

The cost auditor submits the report to the Board of Directors of the company. The company then furnishes the report to the Central Government within thirty days of receiving it, under Section 148(6).

Is the cost audit a substitute for the financial audit?

No. Section 148(4) says the cost audit is in addition to the audit under section 143. The person appointed as the company's auditor under section 139 cannot be appointed to conduct the cost audit.

What happens if the company or the cost auditor defaults?

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