latest notifications by mca new

R.K.Shukla & associates, cost accountants

Cost Accounting Records

Cost Audit Cost Compliance Report

A brief outline of the services which I had and my team are capable to render is as follows;Cost records maintenance as per Cost Accounting Standards.Conducting Statutory Cost Audit and Compliance Report and its XBRL filling.Implementation of costing system for statutory cost audit.Internal & Stock audit.

Our brief profileA professional experience of over last 22 years in the diverse areas of Cost Audit, Compliance Report, Cost records maintenance, Product costing, Cost consultancy, Cost certification, MIS development, Costing system implementation, Internal and stock audit. Taxation, Finalization and consolidation of accounts, Budget Budgeting & Budgetory control, Service tax, VAT and Excise returns in various organizations which include Leather, detergents, Textile, Lighting, Sugar, Dairy, Automobiles, Tire, Pharmaceuticals etc.

Cost certifications & various other certificationsOur deep desire to add value to those availing my services and always try to deliver output with greater emphasis on substance.

The Companies (Cost accounting record) Rules, 2011

Vide the notification by ministry of corporate affairs dated 3rd June, 2011 the Companies Cost Accounting

Record Rules, 2011 apply to every company, including a foreign company as defined under section 591 of

the Act, which is engaged in the production, processing, manufacturing, or mining activities and

Wherein, the aggregate value of net worth as on the last date of the immediately preceding financial year

exceeds five crore of rupees; or

Wherein the aggregate value of the turnover made by the company from sale or supply of all products or

activities during the immediately preceding financial year exceeds twenty crore of rupees; or

Wherein the company’s equity or debt securities are listed or are in the process of listing on any stock

exchange, whether in India or outside India.

Provided that these rules shall not apply to a company which is a body corporate governed by any special

Act;

Provided further that these rules shall not apply to the activities or products covered in any of the following

rules,-

a) Cost Accounting Records (Bulk Drugs) Rules, 1974

b) Cost Accounting Records (Formulations Rules, 1988

c) Cost Accounting Records (Fertilizers) Rules, 1993

d) Cost Accounting Records (Sugar) Rules, 1997

e) Cost Accounting Records (Industrial Alcohol) Rules, 1997

f) Cost Accounting Records (Electricity Industry) Rules, 2001

g) Cost Accounting Records (Petroleum Industry) Rules, 2002

h) Cost Accounting Records (Telecommunication) Rules, 2002

Every company to which these rules apply, including all units (factories) and branches thereof shall, in

respect of each of its financial year commencing on or after the 1st day of April, 2011, keep cost records.

Every company to which these rules apply shall submit a compliance report, in respect of each of its

financial year commencing on or after the 1st day of April, 2011, duly certified by a Cost Accountant,

along with the Annexure to the Central Government, in the prescribed form.

Cost Records

Provisions in the Companies Act, 1956:

Section 209 of the Companies Act 1956 deals with the books of accounts to be maintained by a body

Corporate. The section provides as follows:

(1) Every company shall keep at its registered office proper books of accounts with respect to-

(a) all sums of money received and expended by the company and the matters in respect of which the

receipt and expenditure take place;

(b) all sales and purchases of goods by the company;

(c) the assets and liabilities of the company; and

(d) in the case of a company pertaining to any class of companies engaged in production, processing,

manufacturing or mining activities, such particulars relating to utilization of material or labour or to other

items of cost as may be prescribed, if such class of companies is required by the Central Government to

include such particular in the books of accounts.

Provided that all or any of the books of account aforesaid may be kept at such other place in India as the

Board of Directors may decide and when the Board of Directors so decides, the company shall, within

seven days of decision, file with registrar a notice in writing giving the full address of that other place.

(2) Where a company has a branch office, whether in or outside India, the company shall be deemed to

have complied with the provisions of sub-section (1), if proper books of accounts relating to the transactions

effected at the branch office are kept at that office and proper summarised returns, made up to dates at

interval of not more than three months., are sent by the branch office to the company at its registered office

or other place referred to in sub-section (1).

(3) For the purpose of sub-section (1) and (2), proper books of accounts shall not be deemed to be kept

with respect to the matters specified therein;

(a) if there are not kept such books as are necessary to give a true and fair view of the state of the affairs of

the company or branch office, as the case may be, and to explain its transactions; and, Guidance Note on

Maintenance of Cost Accounting Records.

(b) if such books are not kept on accrual basis and according to the double entry system of accounting.

(4) The books of accounts and other books and papers shall be open to inspection by any director during

the business hours:

(4a) The books of accounts of every company relating to a period of not less than eight years immediately

preceding the current year together with the vouchers relevant to any entry in such books of accounts shall

be preserved in good order:

Provided that in the case of a company incorporated less than eight years before the current year, the

books of accounts for the entire period proceeding the current year together with vouchers relevant to entry

in such books of accounts shall be so preserved.

(5) If any of the persons referred to in sub-section (6) fails to take all reasonable steps to secure

compliance by the company with the requirement of this section, or has by his own wilfull act been the

cause of any default by the company there under, he shall, in respect of each offence, be punishable

with imprisonment for a term which may be extend to one year , or with a fine which shall not be

less than ten thousand but may extend to one lakh rupees, or with both.

Provided that in any proceeding against a person in respect of any offence under this section consisting of a

failure to take responsible steps to secure compliance by the company with the requirement of this section,

it shall be a defense to prove that a competent and reliable person was charged with the duty of seeing that

those requirements were complied with and was in a position to discharge that duty:

Provided further that no person shall be sentenced to imprisonment for any such offence unless it was

committed wilfully.

(6) The persons referred to in sub-section (5) are the following namely;

(a) where the company has a managing director or manager, such managing director or manager and all

officers and other employee of the company ; and

(b) where the company has neither a managing director nor manager, every director of the company.

(7) If any person, not being a person referred to in sub-section (6), having been charged by the managing

director, manager or Board of directors, as the case may be, with the duty of seeing that the requirement of

this section are complied with, makes default in doing so, see Guidance Note on Maintenance of Cost

Accounting Records shall, in respect of each offence, be punishable with imprisonment for a term

which may extend to one year or with fine which shall not be less than ten thousand rupee but may

be extended to one lakh rupees, or with both. In exercise of powers conferred by section 642(1) read

with section 209(1) (d) of the Companies Act, 1956, the Central Government prescribes Cost Accounting

Records Rules for the maintenance of cost records relating to the utilization of materials, labour and other

items of cost, in manner as prescribed, by specified class of companies engaged in production, processing

manufacturing or mining operations of the prescribed products / activities.

List of Companies Covered under Cost Accounting Records Rules :

1-Production

2-Processing

3-Manufacturing, or

4-Mining

(1) “Production Activity” includes any act, process, or method employed in relation to:-

(a) Transformation of tangible inputs (raw materials, semi finished goods, or sub-assemblies) and intangible

inputs (ideas, information, know how) into goods or services; or the companies in software sector etc. will

be covered including the companies where the software bears some exercise classification codes.

(b) Manufacturing or processing or mining or growing a product for use, consumption, sale, transport,

delivery or disposal; or even agriculture produce seems to be covered here.

(c) Creation of values or wealth by producing goods or services.

(2) “Processing Activity” includes any act, process, procedure, function, operation, techniques, treatment

or method employed in relation to:-

(a) Alteration the condition or properties of inputs for their use, consumption, sale, transport, delivery or

disposal; or

(b) Accessioning, arranging. Describing, or storing products; or (warehousing etc.)

(c) Developing, fixing and washing exposed photographic or cinematographic film or paper to produce

either a negative image or positive image; or (Photography companies; Media/Movie production houses

etc.)

(d) Printing, publishing, finishing, perforation, trimming, cutting, or packing; (printing/packaging companies

are also covered)

(e) Pumping oil, gas, water, sewage or any other products; or

(f) Transforming or transmitting, distributing power or electricity; or

(g) Harboring, berthing, docking, elevating, lading, stripping, stuffing, towing, handling, or warehousing

products; or

(h) Preserving or storing any product in cold storage; or

(i) Constructing, reconstruction, reconditioning, repairing, servicing, refitting, finishing, or demolishing of

buildings or structures; or (Construction of Real estate companies along with companies providing Repair

and Maintenance services are covered)

(j) Farming, feeding, rearing, treating, nursing, caring and stocking of living organisms; or (Dairy business,

hospitals run by companies etc. are covered)

(k) Telecasting, broadcasting, telecommunicating voice, text, picture, information, data or knowledge

through any mode or medium; or (Media companies, TV channels etc.)

(l) Obtaining, compiling, recording, maintaining, transmitting, holding or using the information or data or

knowledge; or (Research companies etc. are covered)

(m) Executing instructions in memory to perform some transformation and / or computation on the data in

the computer memory; (Software companies etc are covered)

(3) “Manufacturing Activity” includes any act, process or method employed in relation to:

(a) Transformation of raw material, component, sub-assemblies, or parts into semi finished or finished

products; or

(b) Making, altering, repairing, fabricating, generating, composing, ornamenting, furnishing, finishing,

packing, repacking, oiling, washing, cleaning, breaking-up, demolishing, or otherwise treating or adopting

any product with a view to its use, sale, transport, delivery or disposal; or (Service Sector companies) in

repairing (AMC’s Service Station companies) etc are also covered; or

(c) Constructing, reconstruction, reconditioning, servicing, refitting, repairing, finishing or breaking up of any

products.

(4) “Mining Activity” includes any act, process or method employed in relation to extraction of ores,

minerals, oils, gases or other geological materials from the earth’s crust, including sea bed or river bed.

The Companies (Cost Audit report) Rules, 2011

Vide notification dated 3rd June, 2011 the Companies cost audit report rules, 2011 shall apply to

every company in respect of which an audit of the cost records has been ordered by the Central

Government under sub-section (1) of section 233B of the Act.

Every Cost Auditor, who conducts an audit of the cost records of the company, shall submit the report along

with auditor's observations and suggestions, and Annexure to the Central Government in the prescribed

form and at the same time forward a copy of such report to the company.

The unit-wise, product-wise cost statement duly certified by the Cost Auditor is also to be kept in

the company. The product group-wise cost statement of all the products and all units combined

together will form part of the Cost Audit Report.

The Companies (Cost Audit Orders)

Industry specific Cost Audit Order for Regulated industries.

Vide order F. No.52/26/CAB-2010 dated 2nd may, 2011 the Central Government directs that the

companies to which the following rules apply,

(a) Cost Accounting Records (Bulk Drugs) Rules 1974 (b) Cost Accounting Records (Formulations) Rules,

1988 (c) Cost Accounting Records (Fertilizers) Rules, 1993 (d) Cost Accounting Records (Sugar) Rules,

1997 (e) Cost Accounting Records (Industrial Alcohol) Rules, 1997 (f) Cost Accounting Records (Electricity)

Rules, 2001 (g) Cost Accounting Records (Petroleum) Rules, 2002 (h) Cost Accounting Records

(Telecommunication) Rules, 2002.



Wherein the aggregate value of turnover from sale or supply of all its products or activities exceeds twenty

crore of rupees or

Wherein the equity or debt securities are listed or in process of being listed in any stock exchange in

India or outside India shall get its cost accounting records commencing on or after 1st April 2011

audited by Cost Auditor who shall be a Cost Accountant or firm of Cost Accountant holding valid

certificate of practice under provisions of Cost & Works Accountants Act 1959.

Industry specific Cost Audit Order for Unregulated industries.

Vide order F. No.52/26/CAB-2010 dated 3nd may, 2011 the Central Government directs that the

companies to which the following rules apply

(a) Cost Accounting Records (Cement) Rules,1997 (b) Cost Accounting Records (Tires & Tubes) Rules,

1967 (c) Cost Accounting Records (Steel Plant) Rules, 1990 (d) Cost Accounting Records (Steel Tubes &

Pipes) Rules, 1984 (e) Cost Accounting Records (Paper) Rules, 1975 (f) Cost Accounting Records

(Insecticides) Rules, 1993.

Wherein the aggregate value of turnover from sale or supply of all its products or activities exceeds

hundred crore of rupees or


India or outside India shall get its cost accounting record commencing on or after 1st April 2011



Industry specific Cost Audit Order for Unregulated industries

Vide order dated F. No.52/26/CAB-2010 30th June, 2011 the Central Government directs that the

companies engaged in the production, processing, manufacturing or mining of

Cement, Tires & Tubes, Steel, Paper, Insecticides, Glass, Paints and Varnishes, Aluminium, identifying

industries with Relevant Chapter Heading of the Central Excise Tariff Act, 1985.

Including intermediate products and articles or allied products thereof,







Industry specific Cost Audit Order for Unregulated industries.

Vide order dated F. No.52/26/CAB-2010 24th Jan, 2012 the Central Government directs that the

companies engaged in the production, processing, manufacturing or mining of

Jute, Cotton, Silk, Woolen or Blended Fibers/Textiles, Edible Oil Seeds and Oils (incl. Vanaspati), Packaged

food products, Organic & Inorganic Chemicals, Coal & Lignite, Mining & Metallurgy of Ferrous & non

Ferrous Metals, Tractors & other Motor Vehicles (incl. Automotive Components), Plantation Products,

Engineering Machinery (incl. Electrical & Electronic Products) identifying industries with Relevant Chapter

Heading of the Central Excise Tariff Act, 1985.

Including intermediate products and articles or allied products thereof,





respectively audited by Cost Auditor who shall be a Cost Accountant or firm of Cost Accountant

holding valid certificate of practice under provisions of Cost & Works Accountants Act 1959.

All companies that were covered under specific orders dated 2nd May 2011 or 3rd May 2011

or 30th June 2011 or 24th January 2012 shall continue to comply with the earlier orders up

to the financial year commencing prior to 1st day of January 2013 and thereafter the

following order will apply;

Vide order F. No.52/26/CAB-2012 dated 6th November, 2012 the Central Government directs that all

companies to which the following rules apply

1- (a) Cost Accounting Records (Telecommunication Industry) Rules 2011 (b) Cost Accounting Records

(Petroleum Industry) Rules, 2011 © Cost Accounting Records (Electricity Industry) Rules, 2011 (d) Cost

Accounting Records (Sugar Industry) rules, 2011 (e) Cost Accounting Records (Fertilizer Industry) Rules,

2011 (f) Cost Accounting Records (Pharmaceutical Industry) rules, 2011;

And which are engaged in the production, processing, manufacturing or mining of the products /activities

included in the said rules or covered in the following products or activity groups (Table-1) and



Wherein the aggregate value of turnover from sale or supply of all its products or activities exceeds twenty

crore of rupees or


India or outside India shall get its cost accounting record commencing on or after 1st, January 2013

audited by Cost auditor who shall be a Cost Accountant or firm of Cost Accountant holding valid


Table-I

Sr.

No.

Product or

Activity

Group Code

Name of the product or Activity group Central Excise Tariff Act

(CETA) Chapter heading

covered in the Product

or Activity Group

1 1020 Sugar and Sugar Products 1701 to 1702

2 1021 Molasses 1703

3 1027 Ethyl Alcohol and other Spirits 2207

4 2004 Petroleum Oils-Crude 2709

5 2005 Petroleum Oils-Refined 2710

6 2006 Petroleum Gases and other Gaseous

hydrocarbons

2711

7 2007 Other Petroleum Products 2712 to 2715

8 2008 Electrical Energy 2716

9 2012 Bulk Drugs 2901 to 2942

10 2015 Pharmaceutical Products 3001 to 3006

11 2016 Animal or Vegetable Fertilizers 3101

12 2017 Mineral or Chemical Fertilizers- Nitrogenous 3102

13 2018 Mineral or Chemical Fertilizers –Phosphatic 3103

14 2019 Mineral or Chemical Fertilizers-Potassic 3104

15 2020 Mineral or Chemical Fertilizers-Others 3105

16 5101 Basic telephone services- wired and WLL Not applicable

17 5102 Cellular Mobile telephone services-Wired and

WLL

Not applicable

18 5103 Internet and broadband services Not applicable

19 5104 National long distance services Not applicable

20 5105 International long distance services Not applicable

21 5106 Public mobile radio trunk services Not applicable

22 5107 Global mobile personal communication

services

Not applicable

23 5108 Passive telecom infrastructure and tower

facilities

Not applicable

24 5109 Cable landing stations Not applicable

25 5121 Broadcasting and related services Not applicable

26 5141 Other communication services not elsewhere Not applicable

specified

27 5406 Transmission or distribution of electricity Not applicable

2- The central Government directs that all companies to which the Companies (Cost Accounting Records)

Rules, 2011 apply and which are engaged in the Production, Processing, Manufacturing or Mining of the

products / activities included in the following product or activities groups (Table-II), and


Hundred crore of rupees or


India or outside India shall get its cost accounting record commencing on or after 1st, January 2013

audited by cost auditor who shall be a Cost Accountant or firm of Cost Accountant holding valid


Table-II

Sr.

No.

Product

or

Activity

Group

Code

Name of the product or Activity group Central Excise Tariff Act

(CETA) Chapter heading

covered in the Product or

Activity Group

1 1002 Meat and Meet Products 0201 to 0210; 0410; 1601 to

1603

2 1003 Marine Products 0301 to 0307; 1604 to 1605

3 1004 Milk and Milks Products 0401 to 0406

4 1005 Poultry and related Products 0407 to 0408

5 1006 Bee Products 0409

6 1010 Vegetables 0701 to 0714

7 1011 Fruits and Nuts 0801 to 0814

8 1012 Coffee and Coffee Products (Incl. 210120) 0901

9 1013 Tea and Tea Products (Incl. 210120) 0902

10 1014 Spices-Processed or Unprocessed 0913 to 0910

11 1015 Cereals, Flour and Products of Cereals 1001 to 1008; 1101 to 1109

12 1016 Oil Seeds and Products of Oil Seeds 1201 to 1208

13 1017 Other Seeds and Plants 1209 to 1214

14 1018 Vegetable Saps or Products 1301 to 1302; 1401; 1404

15 1019 Animal or Vegetable Fats and Oils 1501 to 1508; 1520 to 1522

16 1022 Sugar Confectionery or Chocolates 1704; 1806

17 1023 Cocoa Products 1801 to 1805

18 1024 Prepared Food Products 1901 to 1905; 2001 to 2009;

2101 to 2106; 2501

19 1025 Mineral Water and Aerated Drinks 2201 to 2202

20 1026 Alcoholic Beverages 2203 to 2206; 2208

21 1028 Vinegar 2209

22 1029 Food Residues or Prepared Animal Feed 2301 to 2309

23 1030 Unmanufactured and Manufactured Tobacco 2401; 2403

24 1031 Tobacco Products 2402

25 2001 Mineral Products 2502 to 2522; 2524 to 2526;

2528 to 2530; 2601 to 2621

26 2002 Cement 2523

27 2003 Mineral Fuels ( other than Petroleum) 2701 to 2708

28 2009 Chemical Elements 2801 to 2805

29 2010 Inorganic Chemicals and their Derivatives 2806 to 2837; 2839 to 2850;

2852 to 2853

30 2011 Organic Chemicals and their Derivatives

(excluding Bulk Drugs)

2901 to 2942

31 2013 Albuminoidal Substances, Starches, Glues

and Enzymes

3501 to 3507

32 2014 Miscellaneous Chemical Products 3801 to 3807; 3809 to 3825

33 2021 Tanning Substances 3201 to 3202

34 2022 Colours, Dyes and Pigments 3203 to 3207; 3212

35 2023 Paints and Varnishes 3208 to 3211

36 2024 Inks and Colours 3213; 3215

37 2025 Plasters and Fillers 3214

38 2026 Essential Oils 3301 to 3302

39 2027 Personal Care Products 3303 to 3307; 8212; 9615 to

9616

40 2028 Soaps, Detergents Cleaning Agents 3401 to 3402

41 2029 Lubricating Preparations 3403

42 2030 Waxes and Wax Products 3404 to 3407

43 2031 Explosives 3601 to 3603

44 2032 Fireworks, Matches and Combustible 3604 to 3606

Materials

45 2033 Photographic and Cinematographic Goods 3701 to 3707

46 2034 Insecticides 3808

47 2035 Chemicals-Plastics and Polymers 3901 to 3915

48 2036 Articles of Plastics and Polymers 3916 to 3926

49 2037 Rubber and Rubber Products 4001 to 4010; 4014 to 4017

50 2038 Rubber Tyres and Tubes 4011 to 4013

51 3001 Raw Hides, Skins & Leather 4101 to 4107; 4112 to 4115

52 3002 Leather Products 4201 to 4203; 4205 to 4206

53 3004 Wood and Wood Products 4401 to 4421

54 3007 Pulp of Wood and other Substances 4701 to 4707

55 3008 Newsprint 4801

56 3009 Paper and Paper Board 4802 to 4813

57 3010 Articles of Paper and Paper Board 4814; 4816 to 4823

58 3012 Silk 5001 to 5003

59 3013 Silk Yarn 5004 to 5006

60 3014 Silk Fabrics 5007

61 3015 Wool 5101 to 5105

62 3016 Wool Yarn 5106 to 5110

63 3017 Wool Fabrics 5111 to 5113

64 3018 Cotton 5201 to 5203

65 3019 Sewing Thread 5204; 5401

66 3020 Cotton Yarn 5205 to 5207

67 3021 Cotton Fabrics 5208 to 5212

68 3022 Other Textile Yarns or Fabrics 5301 to 5303; 5305 to 5308

69 3023 Other Textile Fabrics 5309 to 5311

70 3024 Synthetic Yarns or Fibers 5402 to 5406; 5501 to 5511;

5601 to 5609

71 3025 Synthetic Fabrics 5407 to 5408; 5512 to 5516

72 3026 Carpets and Textile Floor Coverings 5701 to 5705

73 3027 Other Textile Fabrics or Products 5801 to 5811; 5901 to 5911;

6301; 6305 to 6310

74 3028 Knitted or Crocheted Fabrics 6001 to 6006

75 3029 Apparel and Clothing 6101 to 6117; 6201 to 6217

76 3030 Furnishings 6302 to 6304

77 3031 Footwear and Parts thereof 6401 to 6406

78 3032 Headgear and Parts thereof 6501 to 6502; 6504 to 6507

79 3036 Articles of Stones, Plaster, Cement

Asbestos and Mica

6801 to 6815

80 3037 Ceramic Products 6901 to 6914

81 3038 Glass and Glass Products 7001 to 7011: 7013 to 7020

82 3039 Pearls, Diamonds, Stones and Jewellery

Articles

7101 to 7118

83 4001 Primary Ferrous Materials 7201 to 7205

84 4002 Iron and Non-Alloy Steel 7206 to 7217

85 4003 Stainless Steel 7218 to 7223

86 4004 Other Alloy or Non-Alloy Steel 7224 to 7229

87 4005 Steel Products 7301 to 7326

88 4006 Copper and Copper Products 7401 to 7413; 7415; 7418 to

7419

89 4007 Nickel and Nickel Products 7501 to 7508

90 4008 Aluminium and Aluminium Products 7601 to 7616

91 4009 Lead and Lead Products 7801 to 7802; 7804; 7806

92 4010 Zinc and Zinc Products 7901 to 7905; 7907

93 4011 Tin and Tin Products 8001 to 8003; 8007

94 4012 Other Base Metals and their Products 8101 to 8103; 8301 to 8311

95 4013 Hand Tools 8201 to 8211; 8213 to 8215

96 4014 Nuclear Reactors and Accessories 8401

97 4015 Boilers and Accessories 8402 to 8404

98 4016 Engines or Motors and Part thereof 8405 to 8412

99 4017 Machinery and Mechanical Appliances 8413 to 8484; 8486 to 8487

100 4018 Electric Motors, Generators, Transformers

and Parts thereof

8501 to 8505

101 4019 Batteries and Accumulators 8506 to 8507

102 4020 Electrical and Electronics Equipments or

Appliances

8508 to 8519; 8521 to 8523;

8525 to 8548

103 4021 Railway Rolling Stock 8601 to 8606

104 4022 Parts of Railway Rolling Stock 8607

105 4023 Railway Track Fixtures and Fittings 8608

106 4024 Containers 8609

107 4025 Commercial Vehicles (3 or more wheels) 8701; 8704 to 8707; 8709; 8716

108 4026 Passenger Vehicles (4 or more wheels) 8702 to 8703

109 4027 Parts and Accessories of vehicles 8708; 8714

110 4029 Passenger Vehicles (2 and 3 Wheelers)-

Motorised

8711; 8713

111 4030 Passenger Vehicles (2 or 3 Wheelers) Non-

Motorised

8712; 8713; 8715

112 4031 Non- powered Aircraft and Parts thereof 8801; 8803

113 4032 Aircraft, Spacecraft and Parts thereof 8802 to 8803; 8805

114 4033 Parachutes and Rotochutes 8804

115 4034 Ships and Boats 8901 to 8904

116 4035 Floating Structures 8905 to 8908

117 4036 Optical equipments and Parts thereof 9001 to 9005; 9012 to 9013;

9033

118 4037 Photographic or Cinematographic

Equipment and Parts thereof

9006 to 9008; 9010 to 9011;

9013

119 4038 Measuring instruments and Parts thereof 9014 to 9017; 9023 to 9033

120 4039 Surgical or Medical Instruments and Parts

thereof

9018 to 9022; 9033

121 4040 Clocks or Watches and Parts thereof 9101 to 9114

122 4041 Musical Instruments and Parts thereof 9201 to 9202; 9205 to 9209

123 4043 Medical or Vehicular or Other Furniture and

Mattress and thereof

9401 to 9404

124 4044 Light and Fittings 9405

125 4045 Prefabricated Buildings 9406

126 4046 Toys, Games and Sports equipments 9503 to 9508

127 4047 Stationery Items 9608 to 9612

128 4048 Miscellaneous manufactured articles 9601 to 9607; 9613 to 9614;

9617 to 9618

About Cost Audit

Central Government, in exercise of the powers conferred by clause (b) of sub-section (1) of section 642

read with sub-section (4) of section 233B, and sub-section (1) of section 227 of the Companies Act, 1956 (1

of 1956), and in supersession of the Cost Audit Report Rules, 2001 has issued these rules.

The Companies (Cost Audit Report) Rules, 2011 have been issued by the Ministry of Corporate Affairs vide

Notification no. 430(E) dated 3rd June 2011. Cost Audit Reports submitted on or after 1st day of April, 2012,

Irrespective of the financial year for which the cost audit report is submitted, shall be governed by these

Rules. Cost Audit Reports submitted till 31.3.2012 will be governed by the Cost Audit Report Rules, 2001.

“Cost Auditor” means an auditor appointed to conduct an audit of cost records, under sub-section (2) of

section 233B of the Act and shall be a Cost Accountant within the meaning of the Cost and Works

Accountants Act, 1959. “Cost Accountant” for the purpose of these rules means a Cost Accountant as

defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of

1959) and who holds a valid certificate of practice under subsection (1) of section 6 and who is deemed to

be in practice under subsection (2) of section 2 of that Act and includes a firm of Cost Accountants.

These rules shall apply to every company in respect of which an audit of the cost records has been

ordered by the Central Government under section 233B (1) of the Act. The Companies (Cost Audit

Report) Rules, 2011, every cost auditor, who submits a cost audit report, shall also furnish

Performance Appraisal Report, duly authenticated by the cost auditor, to the Board/Audit

Committee of the company in the prescribed format (Form III). There cannot be NIL report since list of the

areas to be covered in the report as per Form III are relating to company’s operations being audited by the

cost auditor. However, the frequency of this report viz. half yearly/annual (or even quarterly) is to be decided

by the Company Management.

The contents of the Performance Appraisal Report as given in Form III are “indicative”. Depending on the

nature of business and activity of the company, the management and the cost auditor in consultation with

each other can add or delete the indicative areas to be covered under the Performance Appraisal Report.

The intention of the law appears to assign a role to the Cost Auditor to provide an independent view of the

performance of the company to enable the management to take corrective steps wherever necessary. The

Institute is also going to bring out a Guidance Note on the subject. There is no time limit within which the

Central Government can seek clarification from the Cost Auditor. The Rules have now specified that the

Company would be required to maintain the cost accounting records for the preceding eight financial years

in good order. The cost auditor is required to provide reply to any clarification sought for by the Central

Government from the cost auditor in writing within 30 days of the receipt of the communication addressed to

him calling for such clarifications. The unit-wise product-wise cost statements duly certified by the Cost

Auditor and the management are to be kept in the Company. The “product group-wise” cost statement of all

the products and all units combined together will form part of the Cost Audit Report.

Duties of the Company under the Cost Audit Report Rules, 2011

Every company as specified in sub-rule (1) shall, within ninety days of the commencement of every financial

year, file an application with the Central Government seeking prior approval for appointment of the Cost

auditor, through electronic mode, in the prescribed form, along with the prescribed fee as per the

Companies (Fees on Applications) Rules, 1999, and requisite enclosures. However, where a company is

covered under cost audit for the first time vide cost audit order dated 30th June 2011, the period of 90 days

shall be counted from the date of this order.

Every company shall follow the procedure prescribed vide Ministry of Corporate Affairs’ General Circular

No. 15/2011 [File No. 52/5/CAB-2011] dated April 11, 2011. The company and every officer thereof,

including the persons referred to in sub-section (6) of section 209 of the Companies Act, 1956 shall make

available to the Cost auditor, such cost accounting records, cost statements, other books and documents,

and Annexure to the Report, duly completed, as would be required for conducting the cost audit, and shall

render necessary assistance to the cost auditor so as to enable him to complete the cost audit and submit

his report within the time limit specified in rule 5, i.e., within 180 days from the close of the Company’s

financial year to which the report relates.

The Annexure prescribed with the cost audit report shall be approved by the Board of Directors

before submitting the same to the Central Government by the cost auditor.

Clause 143 – Duties of Cost Auditor to Report to Central Government.

If cost auditor of a company, in the course of the performance of his duties as auditor, has reason to believe

that an offence involving fraud is being or has been committed against the company by officers or

employees of the company, he shall immediately report the manner to the central government with in such

time and in such manner as may be prescribed. No duty to which an auditor of a company may be

subjected to shall be regarded as having been contravened by reason of his reporting the manner as above

if it is done in good faith. This provisions shall apply to the Cost Accountant in practice. (Clause-148)

If any, Cost accountant in practice do not report fraud committed or being committed as above , he shall

be punishable with fine which shall not be less than one lakh rupees but which may be extend to twenty

five lakh rupees .

Clause 148:-Audit of items of Cost in respect to certain companies

(1) the Centre Govt. may, by order, in respect of such class of companies engaged in the production of

such goods or services as may be prescribed , direct that particulars relating to the utilisation of material or

labour shall also be included in the books of accounts kept by that class of company with the consultation of

regulatory body.

(2) if it is necessary to do so it may, by order, direct that the audit of cost records in respect of class of

companies, which are covered under sub section (1) and which have net worth of such amount as may be

prescribed or a turnover of such amount as may be prescribed above, shall be conducted in manner

specified in the order.

(3) the audit shall be conducted by a Cost Accountant in practice who shall be appointed by the Board of

Directors on such remuneration as may be decided,

Provided no person appointed under section-139 be appointed and

Further provided that auditor shall comply the cost auditing standards

(4) An audit conducted under this section shall be in addition to the audit conducted under section 143.

(5) The qualifications, disqualifications, rights, duties and obligations applicable to auditors under this Act

shall, be applicable to, apply to a cost auditor

It is the duty of the company to give all assistance & facilities to the cost auditor.

The cost record shall be submitted by the Cost Accountant in practice to the Board of Directors of the

Company.

(6)The Company shall within 30 days furnish the report to Central Government along with full

information.

(7) Default:- In case any default is made in complying with provisions of this section:

(a) The company who is in default shall be punishable with fine which shall not be less than twenty

five thousand rupees but which may extend to five lakh rupees and every officer of the company who is

in default shall be punishable with imprisonment for a term which may extend to one year or with fine which

shall not be less than ten thousand rupees but may extend to one lakh rupees or both-sub section (1) of

section 147.

(b) The cost auditor of the company contravenes any of the provisions of sec. 139, 143, 144 or sec.

145, the auditor shall be punishable with fine which shall not be less than twenty five thousand rupees but

which may extend to five lakh rupees- sub-section(2) of sec-147,

-provided that if auditor has contravened such provision knowingly or wilfully with the intension to deceive

the company/shareholders/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 one lakh rupees but may extend

to twenty five lakh rupees.

(c) Where an auditor has been convicted under sub-section (2) of sec.-147, he shall be liable to:

-refund the remuneration received

- pay damages to the company, statutory bodies or to any person

Cost Compliance Report

Applicability of Cost Compliance Report for the year 2011-12

From the year 2011-12 onwards every Company to which Cost Accounting Record Rules under section 209(1)

(d) apply shall submit a Compliance Report, duly certified by the Cost Accountant, in respect of each of its

Financial year commencing on or after 01.04.2011, to the Central Government, along with the Annexure in the

prescribed Form, This record is to be submitted within 180 days from the close of the Company’s Financial year

to which the Compliance Report relates.

In respect of Companies engaged in production, procession, manufacturing or mining activity, and falls any

one of the following category:

1. Net Worth of Rs. 5 Crore or more; or

2. Turnover exceeding Rs. 20 Crore ;or

3. Wherein the company’s equity or debt securities are listed or are in the process of listing on any stock

exchange, whether in India or outside India.

are required to maintain Cost Records on regularly basis showing margin for each and every product

manufactured/produced/constructed or services provided.

Also the companies will be required to file Compliance Report with the MCA within 180 days of the close of

financial year.

It shall be the duty of MD/ Every Director and other officers of the Company to take all reasonable steps to

secure Compliance by the Company with the provisions of these rules as he is liable to maintain accounts u/s

209(1)(d). The Annexure to the compliance report shall be approved by the Board of Directors and certified

by the Cost Accountant before submitting the same to the Central Government by the Company.

Our services

1-We assist in maintenance of your cost accounting records.

(a) We ensure that the cost records are kept on regular basis in such manner so as to make it possible to

calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products

and activities for every financial year on monthly/quarterly/half-yearly/annual basis.

(b) The cost records are maintained in accordance with the generally accepted cost accounting principles

and cost accounting standards issued by the Institute; to the extent these are found to be relevant and

applicable. The variations, if any, are clearly indicated and explained.

(c) The cost records are maintained in such manner so as to enable the company to exercise, as far as

possible, control over the various operations and costs with a view to achieve optimum economies in

utilization of resources.

(d) We reconcile your cost records and cost statements, maintained under these rules with the audited

financial statements for the financial year specifically indicating expenses or incomes not considered in the

cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the

overall profit of the company. The variations, if any, are clearly indicated and explained.

2- We submit your compliance report to Central Government.

We certify your compliance report and submit it to the central government in the prescribed Form -A in

XBRL mode along with annexure.

3- We conduct your cost audit wherever applicable.

We conduct an audit of the cost records of the company and submit the Cost Audit report to Central

Government in the prescribed Form- I in the XBRL mode along with our observations and suggestions and

Annexure and at the same time forward a copy of such report to you.

4- We also furnish Performance Appraisal Report to the Board/Audit Committee of the Company in the

prescribed Form III to enable the management to take corrective steps to control current operations and

plan for future wherever necessary.

Cost & Other Certification

• Certification under various Statutory Regulations i.e. Certification of Cost of Production for Captive

Consumption.

• Certification under Central Excise, Custom Act, etc.

• Audit under Central Excise.

• Conducting Internal Audit, Efficiency Audit.

• Stock Valuation.

• Development and Implementation of Costing Systems and Procedures.

• Cost Ascertainment & Profit Analysis.

• Cost Control, Cost Reduction & Profit Improvement Programme.

• Accounts Reconciliation.

• Financial Policy Determination, Working Capital Management, Price Fixation, other Management Decision

Making, Cost Estimation, Cost Calculations etc.

• Statutory Certification as required for Drug Price Control Order, Anti Dumping & Safeguard Duty and other

Statutory Certifications.

• Preparation of Budgeted Profit/Loss, Balance Sheet, Cash Flow & Product wise Budgeted Contribution.

• Preparation, Certification and Filing of Income Tax and Service Tax Return etc.

1. Special Audit under Section 14A & 14AA of the Central Excise Act 1944;

2. Certificate of Cost of production of actively consumed goods as per Rule 8 of Central Excise Act, 1944 in

accordance with Cost Accounting Standard CAS-4 issued by our Institute.

3. Certification of refund of additional duty of Customs on the goods imported for subsequent sale under Indian

Customs Act;

4. Special Audit in certain cases under Section 11 of Customs Act, 1962, The Chief Commissioner of Customs

may, for reasons to be recorded in writing, direct a manufacturer to get the accounts of his warehouse, office,

stores, godowns, factory, depot, or other establishment audited by a Cost Accountant, nominated by him in this

behalf.

5. Under Rule 5 of Customs valuation (Determination of Value of Export Goods) Rules, 2007, the proper

officer shall give due consideration to the cost-certificate issued by a Cost Accountant;

6. Under Rules 6 and 7 of the Customs and Central Excise Duties Drawback Rules, 1995, the exporters may be

asked to furnish the purchase invoice as to the procurement of the raw hides/wet blue leather. They should also

furnish a certificate from the Chartered Accountant/Cost Accountant as to the consumption and cost of

processing chemicals used for its processing and other incidental overhead charges incurred;

7. Certification of various forms prescribed under the Central Electricity Regulatory Commission (CERC);

8. Certification of various type of e-forms and their filing with Registrar of Companies periodically as per the

provisions of Indian Companies Act, 1956 and Limited Liability Partnership (LLP) Firms;

9. Issuance of various certificates under Indian Foreign Trade Policy 2009-14 and Aayat Niryat (Import and

Export) Forms (ANF).

10. Certificate for Average Cost of transportation as per Rule 5 of the Central Excise Valuation (Determination of

Price of Excisable Goods) Rules, 2000.

11. Certificate towards the amount of duty paid on the materials used for the manufacture of exported goods as

indicated in Forms DBK-I,II, IIA,III, IIIA under Customs Act, 1962.

Thanks & Kind regards

R.K.Shukla & Associates

Cost Accountants

Office- B-16/1 Nand Vihar Rohta Road

Meerut-250002 (UP)

Mob. 9027347530/ 7669292372

E-mail; [email protected]

[email protected]

mailto:[email protected]

mailto:[email protected]

latest notifications by mca new

Business