Cost Audit and Cost Records Compliance requirements for Indian companies has undergone a major metamorphosis during the year 2011-12 with the release of new The Companies (Cost Accounting Records) Rules 2011 and The Companies (Cost Audit Report) Rules, 2011.
The erstwhile industry specific Cost Records Rules given way to a General Cost Accounting Records rules which are applicable for almost all manufacturing, mining and processing companies which satisfies the turnover and Networth criteria prescribed in the rules. The Company specific cost audit orders are now become history and right now Cost Audit is applicable as per the industry specific Cost Audit Orders.
Maintenance of Cost Records and Compliance Certificate
As per The Companies ( Cost Accounting Records) Rules 2011, all companies engaged in the activities of Manufacturing, Mining and Processing with the following criteria shall be required to maintain Cost Records.
1. Turnover of Rs.20 Crores or more in the previous financial year Or
2. Networth of Rs. 5 Crores or more as on the last day of previous financial year Or
3. the stock/debts of the company is listed or in the process of listing with any of stock exchages inside or outside the country.
For those companies which satisfies any of the conditions have to maintain cost records and get the records certified by a Cost Accountnat and a Compliance Certificate to be filed with Govt. of India, within 180 days from the date of closure of books of accounts.
The Ministry of Corporate Affairs have released 3 Industry Specific Cost Audit Orders to extend the coverage of Cost Audit to a large number of companies. Following are the Cost Audit Orders issued by the Govt. during 2011-12.
- Cost Audit Order F.No. 52/26/CAB-2010 dated May 02, 2011 for eight industries
- Cost Audit Order F.NO. 52/26/CAB-2010 dated May 03, 2011 for six industries
- Cost Audit Order F.No. 52/26/CAB-2010 dated June 30, 2011 for eight industries (modified Order of May 03, 2011)
- Cost Audit Order F.No. 52/26/CAB-2010 dated 24 January, 2012
Except for the Cost Audit Order issued on May 02, 2011, the threshold limit for the applicability of Cost Audit is Rs.100 Crores turnover and Rs.20 crores for the eight industries specified in May 02, 2011 order. Cost Audit will be applicable for all listed companies in the specified industries irrespective of its turnover.