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Applicability of (cost accounting records) rules 2011

MEENAKSHI (Secretarial officer) (26 Points)

17 January 2012

Our company is an EPC Company involved in engineering, supply and erection of boiler and power plants for various clients in India, with an annual turnover of 700 crores. It has a fabrication shop which is involved in manufacturing structurals, piping, ducting, tanks and vessels, etc., the annual turnover of which is around 5 crores. We would like to know if we come under the category of compulsory cost audit and the Companies (Cost Accounting Records) Rules, 2011.

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4 Replies

CMA. Rakesh Kataria (Practising Cost Accountant) (531 Points)
Replied 17 January 2012

Your company will not come under Cost audit report rules, but it will come under Cost Accounting record rules 2011, and your company needs to take cost compliance certificate from either Practicing Cost Accountant or Cost Accountant working in your company, if you take certificate from your employee cost accountant than make sure that employee should have membership of the institute(ICWAI) and have paid membership fees till date.

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MEENAKSHI (Secretarial officer) (26 Points)
Replied 17 January 2012

Sir,

The General Circular No. 67/2011 of MCA dated 30.11.2011 - Clarification about coverage of certain sectors states that the Companies (cost accounting records) rules 2011 is not applicable to Ancillary products/activities of companies incidental to their main operations and wherein the total turnover from the sale of each such ancillary product/activities do not exceed 2% of the total turnover of the company or 20 Crores, whichever is lower.

In our case the turnover of fabshop is around 5 crores which does not exceed 2% of the total turnover of the company which is nearly 700 crores. Can you please clarify on the applicability of the Companies (Cost accounting records) rules 2011 for this year.

CMA. Rakesh Kataria (Practising Cost Accountant) (531 Points)
Replied 17 January 2012

there are three criterion for the Cost accounting record rules, one is turnover( 20 crore), second is net worth( 5 crore) , third is listing with stock exchange. if you are covered under any one than you will be covered.

you may be not covered under turnover basis but you will be covered under net worth basis, if your net worth of the company is more than 5 crore than you will be covered,

SUDHIR RANJAN PANIGRAHI (Proprietor) (24 Points)
Replied 27 April 2012

Company manufacturing sponge Iron under the chapter 72 & also produced steel(Ingot, TMT Bars), where sponge iron is the main raw materials under chapter 72. Sponge Iron captively used & also sold to 3rd parties.

What are the criteria for applicable of Cost Audit.