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

Under section 148 of the Companies Act, 2013, an audit of cost records conducted under that section stands in which relationship to the audit conducted under section 143?

The cost audit under section 148 is in addition to the statutory audit under section 143. It does not replace it, is not conditional on any qualification, and is not merged into it, so a company covered by both must have both audits.

  1. AIt is in addition to the audit conducted under section 143Correct
  2. BIt replaces the audit under section 143 for companies that have a cost auditor
  3. CIt is conducted only if the section 143 auditor reports a cost-related qualification
  4. DIt forms part of the section 143 audit and is reported within the same report

Explanation

Section 148(4) states that an audit conducted under this section shall be in addition to the audit conducted under section 143. It therefore neither replaces nor merges with the financial statement audit. The option saying it replaces the section 143 audit is wrong because both audits must be carried out.

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