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Cost Audit.

Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan. Cost Audit ascertain the accuracy of cost accounting records to ensure that they are in conformity with Cost Accounting principles, plans, procedures and objective. Cost audit helps in the detection of errors and frauds. The management gets correct and reliable data based on which they can make day-to-day decisions like price fixation. It helps in cost control and cost reduction. It assists the system of standard costing and budgetary control.

Applicable Rules:

The Central Government, in order to govern the cost records / cost audit provisions of companies, has formed ‘Companies (Cost Records and Audit) Rules, 2014’. The said rules were made effective from 30th June, 2014.

Applicability of Cost Records:

According to rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the company is required to maintain cost records, if the following conditions are satisfied:

  1. Company must be engaged in the production of goods or provisions of services as specified in Table A and Table B.
  2. Table A covers Regulated Sectors and Table B covers Non regulated Sectors.
  3. Overall turnover of the companies from all its products and services should be equal to or more than 35 Crore in the immediately preceding financial year.

If all the above conditions are satisfied, then, the company is required to maintain the cost records.

Applicability of Cost Audit:

Provisions relating to cost audit applicability are contained under rule 4 of the Companies (Cost Records and Audit) Rules, 2014. The cost audit applicability as per rule 4 is explained hereunder.

  1. Cost audit would be applicable only to those companies who are specified under Table A and Table B.
  2. In case of Table A specified goods / services, for cost audit purpose, overall annual turnover from all the products / services should be INR 50 Crore or more and aggregate turnover from the individual product / service for which cost records are required to be maintained should be INR 25 Crore or more.
  3. In case of Table B specified goods / services, for cost audit purpose, overall annual turnover from all the products / services should be INR 100 Crore or more and aggregate turnover from the individual product / service for which cost records are required to be maintained should be INR 35 Crore or more.

If the companies are covered under Table A and / or Table B and the above mentioned condition is satisfied, in such case, the companies are required to get their cost records audited from the cost accountant.

Exemption:

Companies whose revenue from export (in foreign exchange) is more than 75% of its total revenue and Companies who are operating from a special economic zone are exempted form Cost Audit.

CompaniesHouse is an MCA Authorized Company Registered Agent in India. The object of the CompaniesHouse is to minimize the cost in Auditing for companies throughout India.

FAQ

What is Cost Audit?

Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan. Cost Audit ascertain the accuracy of cost accounting records to ensure that they are in conformity with Cost Accounting principles, plans, procedures and objective. Cost audit helps in the detection of errors and frauds.

Why is Cost Audit required?

​Cost Audit is requied to ascertain the accuracy of cost accounting records to ensure that they are in coformity with Cost Accounting principles.

Who will do Cost Audit?

​​​​A Cost Accountant can do.

How long does a Cost Audit take?

It depends on the transaction to review.

Is it compulsory to have a Cost Audit?

Certain companies are required to do.

Cost audit would be applicable only to those companies who are specified under Table A and Table B.

In case of Table A specified goods / services, for cost audit purpose, overall annual turnover from all the products / services should be INR 50 Crore or more and aggregate turnover from the individual product / service for which cost records are required to be maintained should be INR 25 Crore or more.

In case of Table B specified goods / services, for cost audit purpose, overall annual turnover from all the products / services should be INR 100 Crore or more and aggregate turnover from the individual product / service for which cost records are required to be maintained should be INR 35 Crore or more.

Who are exempted form Cost Audit?

Companies whose revenue from export (in foreign exchange) is more than 75% of its total revenue and Companies who are operating from a special economic zone are exempted form Cost Audit.

What is the fee for a Cost Audit?

It depends on the size of the business.

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Notes:

  1. With effect from 26.01.2018, the Ministry of Corporate Affairs, Government of India had implemented ZERO Incorporation fee for the companies with the authorized share capital of an amount up to Rs. 10,00,000/-.
  2. If the authorized share capital is more than Rs. 1,00,000/-, the stamp duty will be varied.
  3. Company Name is subject to MCA Approval, you can apply 4 names with one application. CompaniesHouse guides you how to choose Company Name.
  4. The following additional charges are to be paid by companies whose registered office is situated in: PUNJAB – Rs. 10,000/-, MADHYA PRADESH – Rs. 7,500/-, & KERALA – Rs. 3,000/-).
  5. If the desired name is rejected, an extra amount of Rs. 1,000/- need to be paid.
  6. If there are more than two directors, then for each director an extra amount of Rs. 2,000/- will be incurred.
  7. If the company is registered by NRI directors, then an additional amount of Rs. 10,000/- will be incurred.
  8. In case of Annual Compliance, the govt challans will be born by the client.
  9. Audit fee is at actuals on annual basis.

WHAT CLIENTS SAYS?

You are truly experienced in Company Registrations. Keep it up!

Ram Kumar Chilukuri Director, Anewa Engineering Pvt Ltd 02.06.2016

Thanks for your continuous support. God bless you!

Nrupesh CFO, Blujay Solutions Private Limited 14.06.2016

Thank you CompaniesHouse for saving in Income Tax!

Avtar Singh Managing Partner, Chetak Transporters 25.06.2016

We are surprised to get our Company registered in one day. Thanks to you guys!

Mohammed Fasiuddin Director, Avidus Engineering Private Limited 29.06.2016

Thank you for the initial discussion as we choose best business format!

Lakshmi Keerthi Reddy Director, Lavanar Sea Food Farming Private Limited 01.09.2016

Thank you CompaniesHouse for reminding on timely statutory compliance!

Rambabu Director, Cybervillage Solutions Pvt ltd 05.09.2016

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