Section 148 of CA 2013 : Section 148: Central Government To Specify Audit Of Items Of Cost In Respect Of Certain Companies

Explanation using Example

Example Application of Section 148 of The Companies Act, 2013

Imagine a scenario where XYZ Manufacturing Ltd. is a company engaged in the production of steel. The Central Government, aiming to enhance transparency in the usage of resources in the steel industry, issues an order under Section 148(1) of the Companies Act, 2013. This order mandates that XYZ Manufacturing Ltd. includes detailed information about the utilization of raw materials and labor costs in their books of account.

Furthermore, due to XYZ Manufacturing Ltd. having a significant turnover, the Central Government, under Section 148(2), directs that an audit of the company's cost records is necessary. Consequently, XYZ Manufacturing Ltd.'s Board appoints a cost accountant, who is not the same individual as their financial auditor, to perform this audit in compliance with the cost auditing standards as per Section 148(3).

The cost accountant completes the audit and submits the report to the company's Board of Directors. XYZ Manufacturing Ltd. then has 30 days to furnish the cost audit report to the Central Government, along with explanations for any reservations or qualifications mentioned in the report, as required by Section 148(6).

If XYZ Manufacturing Ltd. fails to comply with these requirements, both the company and its officers, as well as the cost auditor, may face penalties as outlined in Section 148(8), in accordance with the punishments specified in Section 147 of the Act.