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Difference: Cost Compliance Report and Cost Audit Report


navneet 
posted on 23 November 2012



Difference in applicability of Cost Compliance Report and Cost Audit Report

 

New Cost Audit Orders and its Comparison with earlier orders

 

With issue of various circulars, cost audit orders and notifications with regard to Cost Accounting, the MCA has set the stage for collection of the authentic information (duly approved by Bard of Directors and verified by a Cost Accountant) with regard to various industries for use by various Ministries. 

 

Till date there seems to be some confusion with regard to applicability, although through this forum a lot of efforts have been undertaken to create awareness among the accounting/secretarial fraternity.

 

Now, the companies fulfilling certain criteria are required to file either Cost Compliance Report or Cost Audit Report with Ministry of Corporate Affairs or both. This small article is a step towards bringing clarity on the various questions which we have received from various readers/stakeholders.

 

Before we provide the difference between the two, please note that presently there seven type of Cost Accounting record Rules which can be categorized into two categories:

 

a. Common

Companies Cost Accounting Records Rules 2011 w.e.f.  year 2011-12

 

b. Industry Specific w.e.f  2012-13 in suppression of earlier relevant rules:

 

i. The Cost Accounting Records (Telecommunication Industry) Rules, 2011 vide Notification no G.S.R. 869(E)

 

ii. The Cost Accounting Records (Petroleum Industry) Rules, 2011 vide Notification no G.S.R. 870(E)

 

iii. The Cost Accounting Records (Electricity Industry) Rules, 2011 vide Notification no G.S.R. 871(E)

 

iv. The Cost Accounting Records (Sugar Industry) Rules, 2011 vide Notification no G.S.R. 872(E)

 

v. The Cost Accounting Records (Fertilizer Industry) Rules, 2011 vide Notification no G.S.R. 873(E)

 

vi. The Cost Accounting Records (Pharmaceutical Industry) Rules, 2011 vide Notification no G.S.R. 874(E)

 

Also there are Companies Cost Audit Report Rules 2011

 

 

 

Cost Compliance Report  (CCR)

Cost Audit Report(CAR)

1

Applicability

Companies carrying on manufacturing, mining, production or processing activities And

 

Fulfilling any one of the following criteria are required to file Cost Compliance Report from the year 2011-12.

 

If all the products are cost audit then only Cost Audit Report is required to be filed

Companies which are required to prepare Cost Records under section 209(1)(d) have to undergo Cost Audit provided cost audit order has been issued in respect of the product/industry to which the company belongs.

 

Broadly, The companies under Industry Specific Rules have to undergo cost audit, if the Turnover is greater than 20 crores or net worth is more than Rs 5 Crores or the company is listed

 

Similarly, the companies (other than belonging to the Industry Specific Cost Accounting Records Rules) pertaining  various industries have been brought under Cost Audit if the turnover is more than 100 crores or company is listed.

 

Please note that the turnover/networth criteria for the year preceding to the financials year is required to seen for applicability of Cost Audit

2

Section Applicable

209(1)(d) of the Companies Act

Section 233B of the Companies Act

3

Whether reported under CARO 2003

Yes

No

4

Whether reported in  23 AC/23ACA

Yes

Yes

5

Who can be appointed for signing the CCR

A cost accountant (fulfilling certain criteria) whether in service of the company or a Practising Cost Accountant

A practicing Cost Accountant/Firm of Cost Accountants

6

Time limit of appointment

No Statutory time limit has been prescribed for appointment of Cost Accountant for issue of Cost Compliance Report

Within 90 days of the commencement of the year

7

Any statutory form for appointment is required to be filed with MCA

No

Yes, Form 23C is required to be filed with MCA within 90 days of the commencement of the year under cost audit

8

Authority, which can appoint Cost Accountant

Any authorized person from Company’s Managment

Board of Directors

9

Whether report is to be approved by Board of Directors

Yes

Yes

10

When to file the report

Within 180 days of the close of the year

Within 180 days of the close of the year

11

Whether report is required to be filed in XBRL

Yes

Yes

12

Is there any specific list of the Industries covered

No, The industries covered under Cost Compliance Report have not been listed till date. However the companies falling under the applicability clause given above are required to file the CCR.

However, reference can be made to the product group classification codes issued by MCA

Yes the list of Industries/products is available at MCA website

http://mca.gov.in/Ministry/cao.html

13

Whether the reports have to be filed plantwise or companywise

Companywise report is required to be filed with MCA

Companywise report is required to be filed with MCA

14

Whether any penalties/prosecution is  applicable for non-compliance with the provisions of various Cost Accounting Report Rules/ Cost Audit Report Rules

Yes

Yes

15

Who will be responsible

All officers-in-default including concerned directors as per Companies Actwill be held responsible

All officers-in-default including concerned directors as per Companies Actwill be held responsible

 

Readers are requested to go through the original notifications also.

 

In case of any clarifications, please feel free to contact us

 

By: CMA Navneet Kumar Jain

FCMA, MBA, LL.B., M.COM., PGDTL, LIII., AIIISLA

Partner

Jitender, Navneet & Co.

Cost Accountants

Delhi:Mumbai:Kolkatta:Gurgaon:Faridibad

Email: navneetic@yahoo.com

www.costaudit.org


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