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CMA Intermediate · Corporate Accounting and Auditing · Cost Audit

Sharma Steels Ltd is covered by an order for cost audit. Which statement about appointing its cost auditor is correct under section 148?

The Board appoints a cost accountant as cost auditor, and the person appointed as the company's auditor under section 139 cannot also be appointed for the cost audit. The remuneration is determined by the members in the prescribed manner.

  1. AThe statutory auditor under section 139 may also be appointed as cost auditor if fees are separate
  2. BThe Board appoints a cost accountant, and the person appointed as auditor under section 139 cannot be appointed for the cost auditCorrect
  3. CThe Central Government appoints the cost auditor and fixes the fee
  4. DThe members appoint the cost auditor and the Board fixes the remuneration

Explanation

Section 148(3) says the cost auditor is a cost accountant appointed by the Board, with remuneration determined by the members. The first proviso bars anyone appointed as auditor under section 139 from being appointed for cost audit, so the option allowing the statutory auditor fails.

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