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CMA Final · Cost and Management Audit · Basics of Cost Audit

As per the text of section 148 of the Companies Act, 2013, the Central Government may direct an audit of cost records for a class of companies covered under sub-section (1) that satisfy which condition?

The Central Government may direct a cost records audit for companies in the specified class that have a prescribed net worth or a prescribed turnover. The section gives these two financial thresholds as alternatives; listing or losses are not the stated criteria.

  1. AOnly a prescribed turnover and no net worth criterion
  2. BOnly a listed status on a recognised stock exchange
  3. CA net worth of a prescribed amount or a turnover of a prescribed amountCorrect
  4. DOnly a loss-making position in the preceding year

Explanation

Section 148(2) allows the Central Government, if it thinks necessary, to order a cost audit for companies covered under sub-section (1) having a prescribed net worth or a prescribed turnover. Listing or loss-making status is not the stated criterion, and turnover is not the only test.

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