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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 other audits is correct under the Companies Act, 2013?

Cost audit is an additional audit alongside the section 143 audit, not a substitute. Section 148(4) says so, and section 148(5) extends the auditor provisions of the Chapter to the cost auditor so far as applicable, while appointment is by the Board.

  1. ACost audit is in addition to the audit conducted under section 143, and the cost auditor's rights and duties as an auditor apply so far as applicableCorrect
  2. BCost audit replaces the audit under section 143 for companies covered by a cost audit order
  3. CCost audit is conducted under section 143 and needs no separate appointment by the Board
  4. DCost audit applies the auditor provisions of the Chapter in full, including appointment by members under section 139, without modification

Explanation

Section 148(4) states that an audit under this section is in addition to the audit under section 143. Section 148(5) applies auditor qualifications, disqualifications, rights, duties and obligations to the cost auditor so far as applicable. The replacement option is wrong because the cost audit does not displace the statutory audit, and appointment is by the Board under section 148(3), not by members.

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