We have discussed applicability of the Companies (Cost Record and Audit) Rules 2014 as amended by the Companies (Cost Record and Audit) Amendment Rules 2014. Certain companies shall maintain cost record as discussed earlier here. Earlier we have discussed Cost Audit under original Rules before these amendment here.
Applicability of Cost Audit [Rule 4]:
Ever company specified in ITEM (A) of Rule 3, shall get its cost record audited if –
the overall turnover of the company from its products and services during preceding financial year is rupees fifty crore or more, or
the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under [item (a) of] Rule 3 is rupees twenty five crore or more. [Rule 4(1)]
Ever company specified in ITEM (B) of Rule 3, shall get its cost record audited if –
the overall turnover of the company from its products and services during preceding financial year is rupees one hundred crore or more, or
the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under [item (B) of] Rule 3 is rupees fifty crore or more. [Rules 4(2)]
The requirement for cost audit under these rules shall not apply to a company which is covered in Rule 3 and (i) whose revenue from export in foreign exchange exceeds seventy five percent of its total revenue, or (ii) which is operating from a specific economic zone. [Rule 4(3), omitted Rule 7 was same]
Cost audit [Rule 6]
The category of companies specified in rule 3 and the thresholds limits laid down in rule 4, shall within one hundred and eighty days of the commencement of every financial year, appoint a cost auditor.
Every such company shall inform the cost auditor concerned of his or its appointment as such and file a notice of such appointment with the Central Government within a period of thirty days of the Board meeting in which such appointment is made or within a period of one hundred and eighty days of the commencement of the financial year, whichever is earlier, through electronic mode, in form CRA – 2, along with the fee as specified in Companies (Registration Offices and Fees) Rules, 2014.
Every cost auditor appointed as such shall continue in such capacity till the expiry of one hundred and eighty days from the closure of the financial year or till he submits the cost audit report, for the financial year for which he has been appointed.
Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the board of Directors within thirty days of occurance of such vacancy and the company shall inform the Central Government in Form CRA – 2 within thirty days of such appointment of cost auditor.
Every cost auditor, who conducts an audit of the cost records of a company, shall submit the cost audit report along with his or its reservations or qualifications or observations or suggestions, if any, in form CRA – 3.
Every cost auditor shall forward his report to the Board of Directors of the company within a period of one hundred and eighty days from the closure of the financial year to which the report relates and the Board of Directors shall consider and examine such report particularly any reservation or qualification contained therein.
Every company covered under these rules shall, within a period of thirty days from the date of receipt of a copy of the cost audit report, furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein, in form CRA-4 along with fees specified in the Companies (Registration Offices and Fees) Rules, 2014.
The provisions of sub-section (12) of section 143 of the Act and the relevant rules made thereunder shall apply mutatis mutandis to a cost auditor during performance of his functions under section 148 of the Act and these rules.
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