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Appointment of Cost auditor

Dipika Verma (Company Secretary) (174 Points)

17 May 2011

Ours is a Public Company (unlisted).We fall under the Category to Mandatorily appoint Cost Auditor u/s 209(1)(d) and u/s 233B of the Companies Act, 1956. Since it is a newly incorporated company we have not yet received Central government's order vide which we can appoint Cost Auditor. what are the procedures to obtain Central Government's order?

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SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 17 May 2011

Dipika-Be Clear on the following point-

1. Sec 209(1)(d)- in case yr co is engaged in production, processing, amnufacturing, mining etc-------u have to maintain cost record as prescribed.

2. Sec 233B-Cost Audit is required only when the CG so orders.

Since u didn't get the order of the CG so far, Cost Audit is not applicable to you. Only u hv to maintain cost record. Sec 209(1)(d) and sec 233B is 2 diff sections and to be read separately.

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SANTOSH SHAH (Company Secretary) (754 Points)
Replied 17 May 2011

Originally posted by : Dipika Verma
	Ours is a Public Company (unlisted).We fall under the Category to Mandatorily appoint Cost Auditor u/s 209(1)(d) and u/s 233B of the Companies Act, 1956. Since it is a newly incorporated company we have not yet received Central government's order vide which we can appoint Cost Auditor. what are the procedures to obtain Central Government's order?

Hi Dipika

Recently there was a circular issued by MCA -revising the procedure for appointment of COST AUDITOR.

As per revised procedure Central Government Approval would not be required for appoint of Cost Auditor.

Am enclosing the same for your reference. MCA -Circular dated 11.04.2011.

Also find attached the summary of the circular and take a call.

Summary of Circular:-

1. Appointment of Cost Auditor will not require prior approval from Central Government.

2. Appointment of Cost Auditor -First Point of Reference is Audit Committee ( AC)

3. Companies where Audit Committee (AC) not required by Law, Board of Directors (BOD) be the first point of reference.

4. AC / BOD to ensure such appointment is free from disqualifications U/S 233B(5) & 224 (3) & (4) of Companies Act.

5. Compliance from Cost Auditor & AC , on non-violation of limits U/S 224 (1-B).

6. AC / BOD to obtain Certificate from Cost Auditor certifying its Independence.

7. Company to File Form 23C by 90 days of start of financial year along with:-

a. B oard Resolution for Appointment of Cost Auditor

b. Certificate from Cost Auditor -Compliance U/s 224 (1-B)

8. E-form approved by Central Govt (CG) by 30 days. If not approved to be resubmitted as per details requested.

9. Company to issue formal letter of appointment to Cost Auditor approved by Board within 30 days of approval of E-Form.

10. Cost Auditor to file E-Form ( Yet to be Developed by MCA) to MCA for such appointment.

11. Disclosure by Companies in Annual Report about Cost Auditor, Due & Actual date of filing of Cost Audit Report.

12. Contravention of provisions of this Circular:-

a. Company :- Punishable U/S 642(2) / 209 (5) & (7) / 233B(11) of Companies Act 1956.

b. Cost Auditor :- Fine extended to Rs.5000/-

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Other views / Experts views solcitied.

regards

Santosh Shah

Attached File : 497066 717719 mca circular appointment of cost auditor by companies 11 04 2011.pdf downloaded: 262 times

Dipika Verma (Company Secretary) (174 Points)
Replied 17 May 2011

Dipika-Be Clear on the following point-

1. Sec 209(1)(d)- in case yr co is engaged in production, processing, amnufacturing, mining etc-------u have to maintain cost record as prescribed.

2. Sec 233B-Cost Audit is required only when the CG so orders.

Since u didn't get the order of the CG so far, Cost Audit is not applicable to you. Only u hv to maintain cost record. Sec 209(1)(d) and sec 233B is 2 diff sections and to be read separately.