Section 148 Cost Audit under Companies Act 2013

Basics of Section 148:

Where the Central Govt is of the opinion that the cost records of such class of companies engaged in the production of such goods and providing such services as may be prescribed , is required to be audited , then the CG on consultation with the regulatory bode can demand for cost audit to be conducted u/s 148. ​

Appointment of Cost Auditor under section 148:

Cost auditor is to be appointed by the Board. A cost Accountant in practice or a firm of cost accountants can be appointed as a cost auditor.

Remuneration Of Cost Auditor under section 148 :

1. In case of a company which is required to constitute audit committee: Remuneration in this case shall be recommended by the audit committee. The remuneration recommended by the audit committee shall be considered and approved by the Board and which shall be ratified subsequently by the shareholders
2. In other Companies: Remuneration in these companies shall be decided by the Board and which shall be ratified by the shareholders subsequently.

Rights, Qualification, Duties of Cost Auditor under section 148:

Same as company auditor appointed under section 139.

Audit Report under section 148:

The cost audit report shall be submitted by the cost auditor to the Board of directors of the company. The company shall within 30 days of receipt of such aufit report furnish to the central govt with such report along with full information and explanation on every reservations or qualification contained therein. After receipt of such information from the board the CG is of the opinion that any further information and explanation is necessary , it may call for such other information and explanation and the compamy shall furnish the same within such time as specified by CG.

Punishment on contravention of this section under section 148 :

1. To the company:
Under Section 148, The company shall be punishable with a fine which shall not be less than Rs. 25000.00 but which may extend to Rs. 500000.00. Every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 1 year or fine which shall not be less than Rs. 10000.00 but which may extend to Rs. 100000.00 or with both Under Section 148.

2. To the auditor:
Under Section 148, He shall be punishable with a fine which shall not be less than Rs. 25000.00 but which may extend to Rs. 500000.00.However if the auditor has contravened such provisions willfully with the intention to deceive the company or its shareholders or creditors or tax authorities , he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than Rs. 100000.00 but which may extend to Rs. 2500000.00.

In case the criminal liability of an audit firm, the liability other than fine shall devolve only on the concerned partner who acted in fraudulent manner.

NOTE:

1. Person appointed under section 139 of the company’s act 2013 cannot be appointed as cost auditor.
2. Audit conducted under this section shall be in addition to the audit conducted under section 143 . It shall not be the substitute for the audit under section 143.