Section 148 of the Companies Act, 2013
Section 148 of the Companies Act, 2013 – Central Government to specify audit of cost accounts in certain cases
🔹 Objective:
Section 148 empowers the Central Government to direct certain companies to maintain cost records and have them audited by a cost accountant, in specified industries or sectors.
✅ Key Provisions:
1. Maintenance of Cost Records [Section 148(1)]:
The Central Government, by rules, can require certain companies (based on nature of goods/services or industry) to:
Maintain cost records in the prescribed manner.
➡️ These typically include manufacturing companies, service providers, and regulated sectors (e.g., electricity, pharma, telecom, etc.)
2. Cost Audit [Section 148(2)]:
Where the Central Government deems it necessary, such companies shall:
Get the cost records audited by a cost accountant (a member of the Institute of Cost Accountants of India).
3. Appointment of Cost Auditor [Section 148(3)]:
The Board of Directors shall appoint a cost auditor, subject to ratification by shareholders in the general meeting.
The rules prescribe the manner and time limit for appointment.
4. Auditor’s Report:
The cost auditor shall submit the cost audit report to the Board of Directors, who shall file it with the Central Government within the prescribed time.
5. Penalties for Non-Compliance:
Company: Fine up to ₹1,00,000.
Officer in default: Imprisonment up to 1 year, or fine between ₹10,000 and ₹1,00,000, or both.
Cost Auditor (if contravenes provisions knowingly): Same penalties as above.
🏢 Who is Required to Do Cost Audit (as per rules)?
Cost audit is mandatory for:
Certain manufacturing companies (e.g., cement, steel, pharma),
Companies with specific turnover thresholds and regulated sectors,
As per Companies (Cost Records and Audit) Rules, 2014.
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