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CMA Final · Cost and Management Audit · Companies (Cost Records and Audit) Rules, 2014

Tapti Chemicals Ltd defaulted in complying with section 148 and failed to facilitate the cost audit. Its cost auditor was also found in default. Which statement about the consequences under section 148(8) is correct?

The company and every officer in default are punishable under section 147(1), while the cost auditor in default is punishable under section 147(2) to (4), as provided by section 148(8). Both the company side and the auditor side are covered, under separate sub-sections.

  1. AOnly the company is punishable, since the cost auditor acts as its agent
  2. BThe company and every officer in default are punishable as per section 147(1), and the cost auditor in default as per section 147(2) to (4)Correct
  3. CThe company, officers and cost auditor are all punishable only under section 147(1)
  4. DOnly the cost auditor is punishable, under section 147(2) to (4)

Explanation

Section 148(8)(a) makes the company and every officer in default punishable in the manner provided in section 147(1). Clause (b) makes the cost auditor in default punishable in the manner provided in sub-sections (2) to (4) of section 147. The two sets of persons are therefore dealt with under different sub-sections.

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