Rules/Forms

Summary of Amendments Made

Rule-3 Application of Cost Records

Earlier, Companies were required to maintain cost audit records u/s 148(1) category-wise on the basis of net worth and/or turnover basis. Now only two categories (regulated sectors and non-regulated sectors) have been retained  and a general threshold of turnover of Rs. 35 crores or more has been prescribed for companies covered. M icro enterprise or a small enterprise as per MSMED Act, 2006 have been taken out of the purview.

Rule-4 Applicability for Cost Audit

Even for regulated sectors like Telecommunication, Electricity, Petroleum and Gas, Drugs and Pharma, Fertilizers and Sugar, Cost audit requirement has been made subject to a turnover based threshold of Rs. 50 crores for all product and services and Rs. 25 crores for individual product or services. For Non-regulated sector the threshold is Rs. 100 crores and 35 crores respectively.

Rule-5 Maintenance of Cost Records

The requirement to maintain cost records in Form CRA-1 have been postponed to Financial Year 2015-16 for the following companies in some non-regulated sectors, namely; Coffee and Tea, Milk Powder and Electricals and electronic machinery.

Rule-6 Cost Audit

Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal  to be filled by the Board of Directors within thirty days of occurrence of such vacancy and the company shall inform the Central Government in Form CRA-2 within thirty days of such appointment of cost auditor.

CRA-1 Forms in which cost records shall be maintained

New Form has been substituted.

The form CRA-1 prescribes the form in which cost records shall be maintained. The revised form categorises the requirement of maintaining proper details as per 30 headings as against 27 headings in previous form. The new headings are as follows: (1) Material Cost, (2) Employee Cost, (3) Utilities, (4) Direct Expenses, (5) Repair and Maintenance, (6) Fixed Assets and Depreciation, (7) Overheads, (8) Administrative Overheads, (9) Transportation Cost, (10) Royalty and Technical Know-how, (11) Research and Development expenses, (12) Quality Control Expenses, (13) Pollution Control Expenses, (14) Service Department Expenses, (15) Packing Expenses, (16) Interest and Financing Charges, (17) Any other item of Cost, (18) Capacity Determination, (19) Work-in-progress and finished stock, (20) Captive Consumption, (21) By-Products and Joint Products, (22) Adjustment of Cost Variances, (23) Reconciliation of Cost and Financial Accounts, (24) Related Party Transactions, (25) Expenses or Incentives on Exports, (26) Production records, (27) Sales records, (28) Cost Statements, (29) Statistical Records, (30) Records of Physical Verification

CRA-3 Form of Cost Audit Report

Clause (vii) have been added to auditor’s report as under:

Detailed unit-wise and product/service-wise cost statements and schedules thereto In respect of the product/services under reference of the company duly audited and certified by me/us are/are not kept in the company

Annexure to Cost Audit Report

Annexure has been reclassified into four parts as under:
Part-A
General Information,
General Details of Cost Auditors
Cost Accounting Policy
Product/Service Details –for the company as a whole
Part-B For Manufacturing Sector
Quantitative Information
Abridged Cost Statement
Details of Materials Consumed
Details of Utilities Consumed
Details of Industry Specific Operating Expenses
Part-C For Service Sector
Quantitative Information
Abridged Cost Statement
Details of Materials Consumed
Details of Utilities Consumed
Details of Industry Specific Operating Expenses
Part-D
Product and Service Profitability Statement
Profit Reconciliation
Value Addition and Distribution of Earnings
Financial Position and Ratio Analysis
Related Party Transactions
Reconciliation of Indirect taxes