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Query

CMA LCS NILESH KUCHERIA (CA F) (Grad CMA LCS CA Finalist CIMA(G).) (66 Points)

01 January 2013

AS SHARE HOLDER OR LAYMAN CAN I ACCESS COST AUDIT REPORT OF COMAPNY PREPARED U/S233B ?

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Ayyswariya RG (Knowledge Seeker) (3711 Points)
Replied 02 January 2013

No, The Cost audit report is not accessible to Shareholders and Public.

According to Cost Audit Report Rules, the Cost auditor is required to submit the Cost Audit Report to the Central Government and a copy thereof to the company concerned. The shareholders and the general public have no access to the Cost audit Report unlike the Financial Audit Report. Cost Audit Report is treated as a confidential document as it contains vital information which if divulged would affect competitiveness of trade and business of the company whose information is so divulged. A Cost Audit Report contains important information such as :

(i) A detailed note on manufacturing process of the Company.

(ii) Quantities and rates of various items of input materials, i.e the entire recipe is given.

(iii) Quantities and rates of utilities consumed.

(iv) Average sales realization, sales promotion expenses including discount allowed.

(v) Details regarding export market, quantity exported, F.O.B realization etc.

(vi) Any other energy saving measure or technical improvement in process , which a company might

have implemented arising out of its own research.

Such data, as a measure of business strategy should not be made available to the competitors who may take advantages and put the company to a disadvantageous position. As such cost data is a secret matter and the company secrets and management strategy contained therein should not be disclosed. There is a provision under subsection(10) of section 233-B of the Companies Act that Central Government can direct a company to make available the Cost Audit Report in full or in part to the shareholders. However this power has not been exercised so far.

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