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

Which statement about the relationship between cost audit under section 148 and the audit under section 143 of the Companies Act, 2013 is correct?

Cost audit is conducted in addition to the audit under section 143, as section 148(4) provides. It neither replaces the financial audit nor depends on the auditor's opinion, and the company's section 139 auditor cannot be appointed to do the cost audit.

  1. ACost audit replaces the section 143 audit for companies covered by a cost audit order
  2. BCost audit is conducted in addition to the audit under section 143Correct
  3. CCost audit is needed only if the section 143 auditor gives a qualified opinion
  4. DCost audit may be done by the section 139 auditor if the Board approves

Explanation

Section 148(4) states that an audit under this section is in addition to the audit under section 143. It does not replace it. The first proviso to section 148(3) bars a person appointed under section 139 as auditor from being appointed for the audit of cost records.

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