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Delay in complying with timelines relating to Cost Audit 2023-24 to be informed to MCA by Cost Auditors

CMA Navneet Kr Jain , Last updated: 13 May 2024  
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Recently, MCA issued various notices after reviewing the cost audit reports, and now ICMAI has come up with an advisory, which we need to follow. We request that you ensure the accuracy of the data, the timely completion of the data, and the filing of the cost audit report. The crux of the advisory is given below, and the same has also been attached.

1) Non-compliance with timelines with regard to approval of cost audit annexures, submission of cost audit report, and filing of cost audit report along with Annexures shall have to be reported to MCA by cost auditors.

Delay in complying with timelines relating to Cost Audit 2023-24 to be informed to MCA by Cost Auditors

2) In the event of non-compliance with the reporting of specific units of measurement as per relevant HSN codes, the cost auditor may have to report it by qualification.

The organizations must ensure compliance with the timelines and also report the correct UOM to avoid any issues later.

Attention is drawn to the recent advisory issued by the Institute of Cost Accountants of India, wherein it has been advised to ensure that the units of measurement are reported strictly as specified under the Customs Tariff Act/Companies Cost Records and Audit Rules in the Cost Audit Annexures.

The cost auditor will be under obligation to mention by way of qualifications, matter of emphasis, or disclosure in case of non-compliance with Rule 31 as specified below. A proper management representation needs to be obtained in cases of deviation and reported in the cost audit report. It means that during the conduct of the cost audit, the MRL must be obtained, explaining the deviation for reporting in the cost audit reports.

Rule 31 CCRAR: Unit of Measurement (UOM)

The Unit of Measurement (UOM) for each Customs Tariff Act Heading, wherever applicable, shall be the same as provided for in the Customs Tariff Act, 1975 (51 of 1975), corresponding to that particular Customs Tariff Act Heading.

Not only this, the cost auditor has been mandated to report to MCA in case there is any delay in complying with the timelines with regard to the completion of the cost audit by September 27, 2024 (in the case of financial years ending on March 31, 2024) and/or filing of the cost audit report in XBRL within 30 days from the date of receipt of the cost auditors.

 

Filing of the Cost Audit Report

Rule 6(6) of the Companies Cost Records and Audit Rules (CCRAR) states Every company covered under these rules shall, within a period of thirty days from the date of receipt of a copy of the cost audit report, furnish the Central Government with such report, along with full information and explanation on every reservation or qualification contained therein, in Form CRA-4 in Extensible Business Reporting Language format in the manner as specified in the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, along with fees specified in the Companies (Registration Offices and Fees) Rules, 2014.

The text of the advisory is given below.

ADVISORY FOR THE MEMBERS

Unit of Measure (UOM) for compilation of Annexures to the Cost Audit Report

All the members of the ICMAI are hereby advised to ensure that Annexures to the Cost Audit Report under the Companies Act 2013 are complied with strictly using the Unit of Measure as specified under the Customs Tariff Act 1975. In case of any deviation, the same needs to be clearly mentioned in the cost audit report by way of appropriate qualification, matter of emphasis, or disclosure. An explanation or justification shall be obtained from the company in the form of a management representation letter (MRL), and the same shall be mentioned in the cost audit report.

For example, in the pharmaceutical industry, where the unit of measure is to be given in terms of weight, the weight of the drug (excluding excipients) shall be used for the compilation of the Annexure to the Cost Audit Report.

 

Submission of a Cost Audit Report

All practicing members of the ICMAI are hereby advised to ensure strict adherence to the statutory timelines for submission of the cost audit report as per the Companies (Cost Records and Audit) Rules 2014. In case there is a delay, the same needs to be informed to the appropriate authorities, including the Cost Audit Branch, MCA, and GOI. Please feel free to get in touch with us at 9810175020 in case any further clarification is required.

The author can also be reached at navneetic@yahoo.com or cmanavneetjain@gmail.com.

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Published by

CMA Navneet Kr Jain
(cost consulting)
Category Audit   Report

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