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CMA Intermediate · Corporate Accounting and Auditing · Cost Audit

Which statement about the relationship between a cost audit under section 148 and the audit under section 143 is correct?

A cost audit under section 148 is in addition to the audit under section 143. It does not replace the financial statutory audit, and it is not conditional on any qualification in the statutory auditor's report.

  1. AThe cost audit replaces the section 143 audit for companies covered by the order
  2. BThe cost audit is in addition to the section 143 auditCorrect
  3. CThe cost audit is done only if the section 143 auditor qualifies the report
  4. DThe section 143 audit is limited to companies not covered by cost audit

Explanation

Section 148(4) states that an audit conducted under section 148 shall be in addition to the audit conducted under section 143. It neither substitutes for it nor depends on a qualified report. Both audits are therefore required for a covered company.

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