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

Section 148 contains several provisions. Which of the following is a feature of the cost audit provisions as stated in the section?

After considering the cost audit report and the company's explanation, the Central Government may call for further information if it thinks necessary, and the company must furnish it within the specified time. The other statements contradict section 148's net worth or turnover limits, auditor provisions and mandatory standards.

  1. AThe Central Government may direct cost audit for any company regardless of net worth or turnover
  2. BThe cost auditor is exempt from the qualifications, disqualifications, rights and duties applicable to auditors under the Chapter
  3. CThe Central Government may, if it needs more information after considering the report and the company's explanation, call for further information, which the company must furnish within the time specifiedCorrect
  4. DThe cost auditor must follow cost auditing standards only if the company's Board so resolves

Explanation

Section 148(7) lets the Central Government call for further information and explanation after considering the report and the company's reply, and the company must furnish it within the specified time. Section 148(2) ties the direction to prescribed net worth or turnover, section 148(5) applies auditors' qualifications and duties to the cost auditor, and the proviso to 148(3) makes standards mandatory.

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