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CMA Final · Cost and Management Audit · Preparation and Filing of Cost Audit Report

Which combination correctly reflects Section 148 on the relationship between cost audit and other audits, and the standards a cost auditor must follow?

Cost audit is in addition to, not a replacement for, the Section 143 audit, and the cost auditor must comply with cost auditing standards issued by the Institute of Cost Accountants of India with the approval of the Central Government.

  1. ACost audit is in addition to the Section 143 audit, and the cost auditor must comply with cost auditing standards issued by the Institute of Cost Accountants of India with Central Government approvalCorrect
  2. BCost audit replaces the Section 143 audit for covered companies, and the auditor follows standards issued by the Central Government alone
  3. CCost audit is in addition to the Section 143 audit, and the auditor follows standards issued by the Institute of Chartered Accountants of India
  4. DCost audit replaces the Section 143 audit, and the auditor follows standards issued by the Institute of Cost Accountants of India

Explanation

Section 148(4) says the cost audit is in addition to the audit under Section 143. The second proviso to Section 148(3) with its Explanation requires compliance with cost auditing standards issued by the Institute of Cost Accountants of India with Central Government approval. Options claiming replacement or ICAI standards contradict this.

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