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

Kaveri Textiles Ltd received the cost audit report prepared under a direction of the Central Government under section 148(2) on 10 March. The report contains a qualification on overhead absorption. Which statement correctly reflects the company's obligation under section 148?

The company must furnish the cost audit report to the Central Government within thirty days of receiving it, along with full information and explanation on every reservation or qualification in it. The duty rests on the company, not the cost auditor, and the Government may call for further explanation afterwards.

  1. AIt must file the report with the Central Government within thirty days of receipt, with full information and explanation on every reservation or qualificationCorrect
  2. BIt must file the report with the Central Government within sixty days, explaining only material qualifications
  3. CIt need not file the report unless the Central Government calls for it
  4. DThe cost auditor must file the report with the Central Government, and the company has no duty to explain

Explanation

Section 148(6) requires the company, within thirty days from receipt of a copy of the cost audit report, to furnish the Central Government with the report along with full information and explanation on every reservation or qualification. The period is thirty, not sixty, days, and the duty lies on the company. The Central Government may later call for further information under section 148(7).

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