CMA Intermediate · Corporate Accounting and Auditing · Cost Audit
Mehta Auto Components Ltd has a cost audit order applicable to it under Section 148. Its statutory auditor under section 139 is CA Rao, who also holds a cost accountant qualification. Who may be appointed to conduct the cost audit?
The cost audit must be done by a cost accountant appointed by the Board, and a person appointed as the company's section 139 auditor cannot be appointed for it. So a different cost accountant must be engaged, not CA Rao.
- ACA Rao, because he holds both qualifications
- BCA Rao, if the members approve his remuneration
- CA cost accountant other than the person appointed as the company's section 139 auditorCorrect
- DAny chartered accountant, since the audit is in addition to the section 143 audit
Explanation
Section 148(3) requires the cost audit to be conducted by a cost accountant appointed by the Board, and its first proviso bars any person appointed under section 139 as auditor from being appointed for the cost audit. So CA Rao is ineligible whatever his qualifications or the approval given to his fee. A chartered accountant who is not a cost accountant does not meet the requirement either.
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