Cost Records and Cost Audit
Cost Records and Cost Audit
Section 148 of the Companies Act, 2013 mandates that specific companies maintain cost records and undergo a cost audit by a practicing cost accountant. This requirement applies to designated regulated and non-regulated sectors, subject to turnover criteria.
Applicability of Cost Records and Cost Audit
Key provisions under Section 148 of the Companies Act, 2013 include:
Maintenance of Cost Records: Companies engaged in the production of specified goods or provision of services must maintain cost records, documenting the utilization of materials, labor, and other cost components.
• Applicability Criteria: Companies listed under Table A (regulated sectors) or Table B (non-regulated sectors) of the Companies (Cost Records and Audit) Rules, 2014, must maintain cost records if their total turnover exceeds INR 35 crores in the preceding financial year.
• Cost Audit Requirement: Companies meeting the prescribed net worth or turnover thresholds must undergo a cost audit.
• Appointment of Cost Auditor: The Board of Directors is responsible for appointing a cost auditor. Non-compliance may result in penalties ranging from INR 25,000 to INR 5,00,000, with additional penalties for responsible officers and auditors.
Cost Records & Audit Services
Cost Audit
Cost Records
Cost Calculator
Definition of Cost Records
Sectors Covered Under Cost Records Requirement
- Telecommunications
- Petroleum Products
- Electricity
- Pharmaceuticals
- Fertilizers
- Sugar
- Railways
- Automobiles
- Cement
- Chemicals
- Construction
- Textiles
- Glass
- Metals (Aluminum, Copper, Zinc, Steel, etc.)
- Paper
- Mining and Minerals
Applicability of Cost Audit
REGULATED SECTORS:
• Overall turnover exceeds INR 50 crores.
• Turnover of products/services under cost records is INR 25 crores or more.
Non-Regulated Sectors:
• Overall turnover exceeds INR 100 crores.
• Turnover of products/services under cost records is INR 35 crores or more.
EXEMPTIONS FROM COST AUDIT
Certain companies are exempt from cost audit requirements:
• Companies in the banking, insurance, and NBFC sectors.
• MSMEs as per Section 7(9) of the MSME Development Act, 2006.
• Companies generating more than 75% of revenue from exports (in foreign exchange).
• Companies operating in Special Economic Zones (SEZs).
Why choose Cost Audit Services at KRG?
- Gives a detailed picture of the company's financial situation and aids in making sound business decisions.
- Effective cash management is enabled by identifying areas for improvement in cash inflow and outflow.
- Aids in the identification of revenue and spending sources, allowing for improved financial planning and budgeting.
- Improves cash flow and reduces financial risk by optimizing accounts payable and receivable operations.
