COMPLIANCE REPORT BY COST ACCOUNTANT

Posted Date : 06-Jul-2011 , 10:27:30 am | Posted By CASANSAAR print

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The Companies (Cost Accounting Records) Rules, 2011, dated 3^rd June, 2011 and the Compliance Report.

SUMMARY OF IMPORTANT PROVISIONS.

These Rules shall apply to every company, including a foreign company as defined under section 591 of the Companies Act, 1956 which is engaged in the production, processing, manufacturing, or mining activities if it satisfies any one of the following conditions. The definitions and interpretations of these activities are elaborated in the abovementioned record rules. The circular is available on http://www.mca.gov.in/Ministry/notification/pdf/Common_Record_Rules_03jun11.pdf.

Further these rules will be applicable to the company if it satisfies any one of the following conditions.

The aggregate value of net worth as on the last date of the immediately preceding financial year exceeds five crores of rupees, OR
The aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds twenty crores of rupees, OR
The company’s equity or debt securities are listed of in the process of listing on any stock exchange, whether in India or outside India.

Provided that these rules shall not apply to a company which is body corporate governed by any Special Act.

Provided further that these rules shall not apply to the activities or products covered in any of the following rules,

Cost Accounting Records (Bulk Drugs) Rules, 1974
Cost Accounting Records (Formulations) Rules, 1988
Cost Accounting Records (Fertilizers) Rules, 1993
Cost Accounting Records (Sugar) Rules, 1997
Cost Accounting Records (Industrial Alcohol) Rules, 1997
Cost Accounting Records (Electricity Industry) Rules, 2001
Cost Accounting Records (Petroleum Industry) Rules, 2002
Cost Accounting Records (Telecommunications) Rules, 2002.

The companies covered under the abovementioned 8 rules (a to h) will continue to maintain cost records as mentioned in the respective rules and be subject to Cost Audit every year as per the MCA (Cost Audit Branch) circular dated 2^nd May 2011.

Maintenance of Records :

Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the 1^st day of April, 2011, keep cost records.
The cost records referred to in sub-rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operation, cost of sales and margin for each of its products and activities for every financial year on monthly/quarterly/half-yearly/annual basis.
The cost records shall be maintained as per the cost accounting standards issued by the ICWA of India (CAS 1 TO CAS 13 are mandatory) and as per generally accepted cost accounting principles.The variations, if any, shall be clearly indicated and explained.
These records shall be maintained for a period of eight financial years. The first financial year starts from 1^st April, 2011.

Compliance Report:

Every company to which these rules apply shall submit a compliance report, in respect of each of its financial year commencing on or after the 1^st day of April, 2011, duly certified by a Cost Accountant, along with the Annexure to the Central Government, in the prescribed form. This report is to be submitted within 180 days from the close of the company’s financial year to which the compliance report relates.

Penalties:

If default is made by the cost accountant in complying with the provisions of these rules, he shall be punishable with fine, which may extend to five thousand rupees.
If a company contravenes any provisions of these rules, the company and every officer thereof who is in default, including the persons referred to in sub-section (6) of Section 209 of the Act, shall be punishable as provided under sub-section (2) of section 642 read with sub sections (5) and (7) of section 209 of Companies Act, 1956.

It is requested that the original circular be refereed which is available on http://www.mca.gov.in/Ministry/notification/pdf/Common_Record_Rules_03jun11.pdf.

You may contact me for any further clarifications.

Kaustubh Chandwadkar

Cost Accountant

Cell No. 9821323304

E mail id : rituraj12@mtnl.net.in

Category : ICWAI | Comments : 1 | Hits : 3855

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