CMA Final · Cost and Management Audit · Companies (Cost Records and Audit) Rules, 2014
Marut Engineering Ltd is covered by an order of the Central Government directing cost audit under section 148. Its Board wishes to appoint the person who is already the company's statutory auditor under section 139 to also conduct the cost audit. What is the legal position?
The appointment is not permitted. Section 148(3) provides that no person appointed under section 139 as the company's auditor may be appointed to conduct the audit of cost records. Having a cost accountant qualification or member-approved remuneration does not override the bar, and the cost audit is in addition to the section 143 audit.
- APermitted, provided the audit fee is determined by the members
- BNot permitted, as no person appointed under section 139 as auditor can be appointed to audit the cost recordsCorrect
- CPermitted, if the statutory auditor is also a cost accountant
- DPermitted only with prior approval of the Central Government
Explanation
The first proviso to section 148(3) says that no person appointed under section 139 as an auditor of the company shall be appointed for conducting the audit of cost records. Holding the cost accountant qualification, or members fixing the fee, does not remove this bar. Section 148(4) also makes the cost audit additional to the section 143 audit.
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