Whether cost audit is mandatory for company doing Real Estate and Jewellery business having turnover of 100 crore?
According to the attached file, it is not applicable.
Pls clarify.
Regards
Neha
Whether cost audit is mandatory for company doing Real Estate and Jewellery business having turnover of 100 crore?
According to the attached file, it is not applicable.
Pls clarify.
Regards
Neha
CA AYUSH AGRAWAL
(Kolkata-Pune-Mumbai)
(26986 Points)
Replied 14 September 2012
Can Any One Post Here Cost Audit Applicability Cover Total Till Date Notifications.
| Originally posted by : CA AYUSH AGRAWAL | ||
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Can Any One Post Here Cost Audit Applicability Cover Total Till Date Notifications. |
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Yes Ayush,
There are so many conflicting opinion and views of people / experts over the issue that to which companies (in terms of business activity, not in terms of net worth / turnover) cost audit is applicable?
Regards
CA AYUSH AGRAWAL
(Kolkata-Pune-Mumbai)
(26986 Points)
Replied 14 September 2012
| Originally posted by : Neha Jain | ||
|
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Can Any One Post Here Cost Audit Applicability Cover Total Till Date Notifications.
Yes Ayush, |
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Yes, Neha But One Should Post here Na.
There is Little Bit Confusion Regarding Applicability.
Many Experts Have Their Own Opinion.
Rahul Jain
(Rahul Jain & Associates. (Cost Accountants))
(795 Points)
Replied 16 September 2012
Dear All,
Cost records and compliance is applicable for construction industries involved in residential/commercial complexes/roads/dams etc......... from f/y 2011-12.
And also on jwellery making.......... as it is said to be manufacture.... but audit is applicable.......
Please find the attached excel file for more clarifications Or mail me any specific query.....
Thanks and Regards
CMA Rahul Jain
rahuljain @ jmsandco.in
Srikanth M S
(finalist)
(88 Points)
Replied 16 September 2012
Dear Neha,
Sec. 209(1)(d): in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account.
Sec 233B(1): Where in the opinion of the Central Government it is necessary so to do in relation to any company required under clause (d) of sub-section (1) of section 209 to include in its books of account the particulars referred to therein, the Central Government may, by order, direct that an audit of cost accounts of the company shall be conducted in such manner as may be specified in the order by an auditor who shall be a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 (23 of 1959)
As per the above neither of Sec 209 nor Sec 233B specifies the applicability of Maintenance of Cost records for The construction industry. However, with the release of Notification dt. 3-June-2011, applicable from the FY 2011-12.
/articles/statutory-audit-of-construction-real-estate-companies-carr-13405.asp#.UFYQPrCUqvg
Regards,
Srikanth.M.S
Dear Rahulji,
Thanks for your reply.
Does that means any company which is involved in manufacturing, mining, processing having turnover of 20 cr is required to obtain compliance report.
What are the activities which are defined as amounting to manufacturing, mining, processing ?
And if the turnover exceeds 100 cr. it has to get cost audit done ?
Pls explain in lucid manner.
Await your replies to my queries.
Rahul Jain
(Rahul Jain & Associates. (Cost Accountants))
(795 Points)
Replied 19 September 2012
Manufacturing :- Converting any product into something else so that its identity/use/name changes
Mining:- Extracting any natural resource from the earth (Coal,stone etc)
Processing:- Same like manufacturing but exact identity/use/name may/may not change... Eg-only quality is increased etc..
So by refering the excel file attached earlier all Manufacturing/processing/mining companies are covered under meeting any of 3 criteria have to maintain cost records and file a compliance report.
But in case any of these comany is covered under S.No. - 2/4 Category of excel file and Turnover exceeds 100 Cr then co will maintain cost records and will appoint a cost auditor.
And in case any of these comany is covered under S.No. - 3 Category of excel file and Turnover exceeds 20 Cr then co will maintain cost records and will appoint a cost auditor.
Hope now its clear or reply in case of any query
Thanks
CMA Rahul Jain
rahuljain @ jmsandco.in
Dear Rahulji,
Excel sheet prepared by you is really very helpful and nicely prepared. Accept my appreciation for that.
But I would like to tell you about my query pointwise -
1. Serial no . 2, 3 and 4 specifies certain industry / regulated industry and unregulated industry but s. no 1 does not specify any industry.
Does this mean all sort of industry are covered in s. no .1 and whats the diff between industry / regulated industry and unregulated industry specified in s. no. 2, 3 and 4
2. S. no. 2 and 4 does not talk abt net worth. So, in case of cement industry which is covered in serial no 2, If turnover is 80 cr and networth is 10 cr. then will it require cost compliance report under s.no.1 ?
| S.No. | Particulars | Maintenance of Cost Records | Filing of Cost Compliance Report | Cost Audit | Notification Date | Industry | Chapter Head |
| 1) | Any manufacturing,processing or mining co if:- | Yes | Yes | No | 3rd June 2011 | All Manufacturing, Processing and Mining Industries | Includes Construction Companies also |
| a) Turnover during 2011-12 is more than 20 Cr. Or | |||||||
| b) If Net Worth as on 31st Mar 2012 is more than 5 Cr. Or | |||||||
| c) Co, is listed or is in process of. | |||||||
| 2) | Any manufacturing,processing or mining co if:- | Yes | NO | Yes | 30th June 2011 | Industry | Chapter Head |
| a) Turnover during 2011-12 is more than 100 Cr.,or | Cement | 25,38,68 | |||||
| B) Co, is listed or is in process of.,or | Tyres & Tubes | 40 | |||||
| Steel | 72,73 | ||||||
| Paper | 47,48 | ||||||
| Insectisides | 38 | ||||||
| Glass | 70 | ||||||
| Paint & Varnishes | 32 | ||||||
| Aluminium | 76 | ||||||
| 3) | Any manufacturing,processing or mining co if:- | Yes | NO | Yes | 7th Dec 2011 | Regulated Industries | |
| a) Turnover during 2011-12 is more than 20 Cr.,or | Pharmaceutical | Electricity | |||||
| b) If Net Worth as on 31st Mar 2012 is more than 5 Cr.,or | Fertilizers | Petroleum | |||||
| c) Co, is listed or is in process of. | Sugar | Telicommunication | |||||
| 4) | Any manufacturing,processing or mining co if:- | Yes | NO | Yes | 24th Jan 2012 | Unregulated Industries | |
| a) Turnover during 2011-12 is more than 100 Cr., or | Jute, cotton, silk, woolen or blendedfibers/textiles | 50 to 63 | |||||
| B) Co, is listed or is in process of. | Edible oil seeds and Oils (incl.vanasppati | 12 to 15 | |||||
| Packaged food products | 2 to 25 (Except 5,6,14,23,24) | ||||||
| Organic & Inorganic Chemicals | 28,29,32,38,39 | ||||||
| Coal & Lignite | 27 | ||||||
| Mining & Metallurgy of ferrous & non-ferrous metals | 26 & 74 to 83 (Except 76,77) | ||||||
| Tractors & other motor vehicles (incl.automotive components) | 84,85,87 | ||||||
| Plantation Products | 8,9,21,40 | ||||||
| Engineering machinery (incl. electrical& electronic products) | 84,85 | ||||||
Rahul Jain
(Rahul Jain & Associates. (Cost Accountants))
(795 Points)
Replied 20 September 2012
Dear Neha,
Very good point...........
1) Point no 1 covers all the manufacturing/processing/mining companies,meeting any of the critetia (Turnover>20 cr ,or net worth > 5sr, or any security listed). If any of the above criteria meets during 2010-11 then applies in 2011-12 and if meets during 2011-12 then in 2012-13.
Regulated Industries:- On some industries there is a regulated body to control the prices,like TRAI on telecom ..... Audit was previously also mandatory on these ...... but due to essential in nature of their products audit is made mandatory on and above 20 cr turnover.....
Unregulated:- Industries other than regulated ones....... audit is mandatory if turnover > 100 cr.
2) If its a cement industry having networth 10cr and turnocer 80 Cr. then as per S.No. 1 records and compliance is mandatory but as turnover doesnt exceeds 100 cr audit is not mandatory.......
Thanks
CMA Rahul Jain
Hello,
Thank you so much Rahulji. Pls confirm my 2 understanding which I have made out of your explanations which are quite easy to understand.
1. Turnover / networth is calculated for the year 2011-2012 for the applicability of cost compliance report and audit for the year 2012-2013.
2. Industries covered under serial no 1 are -
a. All Industries other than those which are specified under serial no. 2, 3 and 4
b.All Industries which are specified under serial no. 2, 3 and 4 (eg. cement)
Also I have 2 more queries, pls try to solve them for me.
1. Applicability of cost audit / cost compliance report and cost records on a jewellery manufacturing co. having turnover of 500 cr. and networth of 75 crore?
2. What are the last date for cost audit / cost compliance report of FY 2011-2012 ?
With Regards
Neha
Rahul Jain
(Rahul Jain & Associates. (Cost Accountants))
(795 Points)
Replied 21 September 2012
Dear Neha,
1) On Jwellery making only compliance is applicable as it doesnt fall under any of the category (2/3/4).
And here 2 criteria are being satisfied out of 3. So Records and Compliance is applicable.
2) Last date of Submitting Cost Audit Report/Compliance Report was 31st sep earlier but it has been
extended till 31st Dec 2012,only for the year 2011-12. But 2011-12 onwards it will be 31st Sep. only.
CMA Ajay Jaisingh
(Ajay Jaisingh & Associates Cost Accountants Ahmedabad)
(79 Points)
Replied 01 October 2012
Just to correct a bit in Sr. No. 2 to 4. If all the products being manufactured by Company are not under Cost Audit, then Complianc Report is to be filed for Company as a whole and Cost Audit Report to be filed for the concerned Product under Audit.
Rahul Jain
(Rahul Jain & Associates. (Cost Accountants))
(795 Points)
Replied 01 October 2012
Yes Ajay Completely agree..........
| Originally posted by : CMA Ajay Jaisingh | ||
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Just to correct a bit in Sr. No. 2 to 4. If all the products being manufactured by Company are not under Cost Audit, then Complianc Report is to be filed for Company as a whole and Cost Audit Report to be filed for the concerned Product under Audit. |
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Dear Ajayji/ Rahulji,
Pls clarify with an example, whats the meaning of Complianc Report is to be filed for Company as a whole and Cost Audit Report to be filed for the concerned Product under Audit.
Regards
CAclubindia
