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Key Highlights of General Circular no. 67 & 68 for Cost Audit Dated 30-11-2011 December 8, 2011

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Cost Accounting.
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  1. The companies covered under Companies (Cost Accounting Records) Rules, 2011 shall only file a simple compliance report as per the notified Form-B.
  2. For companies coming under the purview of the Companies (Cost Accounting Records) Rules, 2011 and the Companies (Cost Audit Report) Rules, 2011 for the first time, cost records and cost details, statements, schedules, etc. shall be kept in good order for the next eight financial years beginning with first year of application of the said Rules.
  3. The Companies (Cost Accounting Records) Rules, 2011 are not applicable to:-
    1. Wholesale or retail trading activities.
    2. Banking, financial, leasing, investment, insurance, education, healthcare, tourism, travel, hospitality, recreation, transport services, business/professional consultancy, IT & IT enabled services, research & development, postal/courier services, etc. unless any of these have been specifically covered.
    3. Companies engaged in rendering job work operations or contracting/sub-contracting activities, and are paid only the job work or conversion charges, such as tailoring, baking, repairing, painting, printing, constructing, servicing, etc.
    4. Companies engaged in the production, processing, manufacturing or mining activities till the time they commences their commercial operations.
    5. Ancillary products/activities of companies incidental to their main operations and wherein the total turnover from the sale of each such ancillary products/activities do not exceed 2% of the total turnover of the company or Rs. 20 Cr, whichever is lower.
  4. The Cost Audit shall not apply to the following cases:-     
    1. Generation of electricity for captive consumption.
    2. Own manufactured products that are consumed exclusively by the company for the sole purpose of production, processing, manufacturing, or mining of its other products or activities that are subject to cost audit.
    3. Hundred per cent Export Oriented Units.
  5. Items falling under the relevant chapter(s) of the Central Excise Tariff Act, 1985 as constitute intermediate or final or allied products of the industry mentioned in the Cost Audit Order dated 30th June, 2011 shall be covered under cost audit and all other items not related to the industry shall be outside the purview of said orders.

Compiled by CMA. Sukhwinder Singh

Member Audit And Assurance Team

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The Companies (Cost Audit Report) Rules, 2011 November 18, 2011

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Cost Accounting.
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Cost Audit is mandatory for 14 industries.

Category 1.

Category 2.

Bulk Drugs Cement
Formulations Tyres & Tubes
Fertilizers Steel Plants
Sugar Steel Tubes and Pipes
Industrial Alcohol Paper
Electricity Industry Insecticides
Petroleum Industry  
Telecommunications  

Criteria

Criteria

1. Aggregate value of net worth exceeds Rs. 5 Cr. Or 1. Aggregate value of turnover exceeds Rs. 100 Cr. Or
2. Aggregate value of turnover exceeds Rs. 20 Cr. Or 2. Company’s equity or debt securities are listed or are in the process of getting listed whether in India or outside India.
3. Company’s equity or debt securities are listed or are in the process of getting listed whether in India or outside India.  

Compile by CMA Sukhwinder Singh

Member Audit & Assurance Team

The Companies (Cost Accounting Records) Rules, 2011 November 17, 2011

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Cost Accounting.
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The Ministry of Corporate affair has prescribed by notification dated 3rd  June 2011 the cost accounting record rules for various industries and products.

These rules shall apply to every company, including a foreign company, other than company which is a body corporate governed by any special Act and also 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 (Telecommunications) Rules, 2002

 

Keeping in view the above the applicability criteria is as under:-

  1. In case of a Production, processing, manufacturing, or mining activities, the  net worth as on 31st March,xxxx  (the last date of the immediately preceding financial year) exceeds Rs. 5 Cr; OR
  2. The aggregate turnover from sale/supply of all product/activities during the immediately preceding financial year exceeds Rs.20 Cr; OR
  3. The company’s equity or debt securities are listed/in the process of listing whether in India/outside India.

Compiled by

CMA. Sukhwinder Singh

Member Audit & Assurance Team