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

Which statement about cost auditing standards under section 148 of the Companies Act, 2013 is correct?

The cost auditor must comply with cost auditing standards. Under the Explanation to section 148(3), these are standards issued by the Institute of Cost Accountants of India with the approval of the Central Government. Compliance is mandatory, and they are not issued by the chartered accountants' institute.

  1. AThe cost auditor conducting the audit shall comply with the cost auditing standards, which are issued by the Institute of Cost Accountants of India with the approval of the Central GovernmentCorrect
  2. BCompliance with cost auditing standards is optional for the cost auditor
  3. CCost auditing standards are issued by the Institute of Chartered Accountants of India
  4. DCost auditing standards apply only to the statutory auditor under section 143

Explanation

The second proviso to section 148(3) requires the auditor conducting the cost audit to comply with the cost auditing standards. The Explanation defines them as standards issued by the Institute of Cost Accountants of India, constituted under the Cost and Works Accountants Act, 1959, with the approval of the Central Government. So compliance is mandatory and the issuing body is the cost accountants' institute.

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