Applicability of Cost Audit in India

Ministry of Corporate Affairs, Cost Audit Branch, New Delhi has issued two orders directing all companies Mandatory COST AUDIT applicable from 1^st day of April 2011 by a Cost Auditor.

 

A] MCA Notification no. 52/26/CAB-2010 dt. 2^nd May 2011

 

The conditions for applicability are –

1) Turnover from sale of all products or activities during 2010-11 exceeds Rs. 20 crores or

2) Listed Companies or Companies in the process of listing ion any stock exchange or

3) Net worth as on the last date of previous financial year exceeds Rs. 5 crores

 

The following Industries are covered –

1) Bulk Drugs   2) Formulations   3) Fertilizers   4) Sugar   5) Industrial Alcohol

6) Electricity   7) Petroleum   8) Telecommunication

 

B] MCA Notification no. 52/26/CAB-2010 dt. 30^th June 2011

 

The conditions for applicability are –

1) Turnover from sale of all products or activities during 2010-11 exceeds Rs. 100 crores or

2) Listed Companies or Companies in the process of listing on any stock exchange

 

The following Industries are covered –

Industry	Central Excise Chapter Heading
1) Cement	25,38,68
2) Tyres & Tubes	40
3) Steel	72,73
4) Paper	47,48
5) Insecticides	38
6) Glass	70
7) Paints & Varnishes	32
8) Aluminium	76

 

Note : Intermediate products and articles or allied products of above industries, if included under any other chapter of the central Excise Tariff Act, 1985 not mentioned above shall also be covered under these rules.

 

C] Cost Audit orders issues earlier to various companies – Cost Audit Orders issued to companies in respect of products/activities prior to these notifications shall continue. Companies already having Cost Audit Orders shall continue their Cost Audit.

 

 

D] MCA Notification dated 3^rd June 2011 – The Companies (Cost Accounting Records) Rules, 2011 are notified. The silent features are as under –

1.  Maintenance of Cost Accounting Records is applicable virtually to ALL companies satisfying following conditions- 

      a) Net worth exceeds Rs. 5 crores; or

      b) Turnover from Sale or Supply of all products or activities exceeds Rs. 20 crores; or

      c) Listed companies or companies in the process of listing

2.  Cost Records are to be maintained for all units and branches of the company from 1st day of April, 2011.

3.  Cost Records shall be kept on regular basis to calculate per unit cost, sales and margin for each product/activity on monthly / quarterly/half yearly/annual basis.

4.  The cost records shall be maintained in accordance with the generally accepted cost accounting principles and cost accounting standards issued by The ICWAI.

5. Compliance Report (CR) – Newly introduced by CARR, 2011. This CR will be applicable to ALL companies irrespective whether Cost Audit orders are issued either to an individual company or industry wise general Cost Audit order issued by the Central Government recently.

a)  CR to be certified by a Cost Accountant in practice or a qualified cost accountant who is permanent employee of the company.

b) CR to be e-filed with the Central Government within 180 days from close of the financial year.

c) The Annexure prescribed with the CR shall be certified by the cost accountant and shall be approved by the Board of Directors before submission to the Central Government.

 

 

Regards
For Dhananjay V. Joshi & Associates

Cost Accountants