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CMA Intermediate · Corporate Accounting and Auditing · Statutory Audit under the Companies Act, 2013

A company is directed by the Central Government to get its cost records audited under section 148 of the Companies Act, 2013. Its statutory auditor under section 139 is a chartered accountant firm, Mehta & Co. Which statement is correct?

The statutory auditor appointed under section 139 cannot be appointed for the cost audit. A cost accountant is appointed by the Board, reports to the Board, and the cost audit is in addition to, not a replacement of, the audit under section 143.

  1. AMehta & Co cannot be appointed for the cost audit, which must be done by a cost accountant appointed by the Board, and the cost audit is in addition to the section 143 auditCorrect
  2. BMehta & Co can also do the cost audit, since the cost audit replaces the section 143 audit
  3. CThe cost auditor is appointed by the Central Government and reports to it directly, not to the Board
  4. DThe cost audit report is submitted to the members at the general meeting, and the cost audit replaces the statutory audit

Explanation

Section 148(3) provides that the cost auditor is a cost accountant appointed by the Board, and a person appointed as auditor under section 139 cannot be appointed for the cost audit. Section 148(4) says the cost audit is in addition to the section 143 audit. The report goes to the Board.

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