Skip to content

CMA Intermediate · Corporate Accounting and Auditing · Statutory Audit under the Companies Act, 2013

Sunrise Textiles Ltd is covered by a Central Government order for cost audit under section 148. Its statutory auditor under section 139 is M/s Rao & Co., chartered accountants. Which statement is correct?

The statutory auditor appointed under section 139 cannot be appointed to audit the cost records, and the cost audit is conducted in addition to, not instead of, the audit under section 143, according to section 148(3) and (4).

  1. AM/s Rao & Co. may also be appointed as cost auditor since both audits are similar
  2. BM/s Rao & Co. cannot be appointed for the audit of cost records, and the cost audit is in addition to the section 143 auditCorrect
  3. CThe cost audit replaces the statutory audit under section 143 for this company
  4. DThe cost auditor is appointed by the statutory auditor and reports to the Central Government directly

Explanation

The first proviso to section 148(3) bars a person appointed as auditor under section 139 from being appointed for cost audit. Section 148(4) states the cost audit is in addition to the section 143 audit, so it does not replace it.

Did you get it right without looking?

One question tells you little. A timed set on Statutory Audit under the Companies Act, 2013 shows your real accuracy, how long you take and where you lose marks.

Practise Statutory Audit under the Companies Act, 2013Free diagnostic mock

More Statutory Audit under the Companies Act, 2013 questions