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

Under the Companies Act, 2013, as reproduced in the provided text on cost audit, what happens if a default is made in complying with the cost audit provisions of the section, so far as the cost auditor is concerned?

A cost auditor who defaults under section 148 is punishable in the manner given in sub-sections (2) to (4) of section 147. Sub-section (1) of section 147 applies to the company and its officers in default, not to the cost auditor.

  1. AThe cost auditor is punishable in the manner provided in sub-sections (2) to (4) of section 147Correct
  2. BThe cost auditor is punishable in the manner provided in sub-section (1) of section 147
  3. CThe cost auditor is not liable; only the company is punished
  4. DThe cost auditor is punishable only by removal from the Board

Explanation

Sub-section (8)(b) of section 148 says the cost auditor in default is punishable as provided in sub-sections (2) to (4) of section 147. Sub-section (1) of section 147 applies to the company and its officers in default, so the second option mixes up the two parties.

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