COST ACCOUNTANTS 1730 , Rajarampuri 6th lane, Near Saraswat Bank, Kolhapur 416008 Phone- (0231) 2527524, Cell

9371438160. Phone ( 0231) 2527524. E-mail- anilcost@yahoo.com Date 07/07/2011 Recent changes in Cost Accounting Records and Cost Audit Report Rules References: MCA Notification no. GSR 430(E) dt.03/06/2011 2. MCA Notification no. GSR 429(E) dt.03/06/2011 3. MCA Order no.52/26/CAB-2010 dt.02/05/2011 4. MCA Order no.52/26/CAB-2010 dt.03/05/2011 5. MCA Order no.52/26/CAB-2010 dt.30/06/2011 6. MCA General Circular no. 52/5/CAB-2011 dt.11/04/2011 7. ICWAI Central Council Approval dt.12-13/02/2009, 14/05/2009, 27/03/2010
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A. G. ANIKHINDI & CO.

A) The Companies (Cost Audit Report) Rules 2011 notified on 03/06/2011 (in supersession of earlier Cost Audit Report Rules 2001 applicable for any report submitted on or after 01/04/2012. Highlights: 1. Cost Auditors appointment within 30 days from beginning of the year 2. Intimation of appointment to be given to Cost Auditor 3. Cost Auditor to file form 23D with MCA within 30 days of intimation 4. Cost Audit Report shall be in the new form 5. Company to maintain all cost records for each Unit, product or activity for 8 years. 6. Cost auditor to furnish Performance Appraisal Report to Board/Audit Committee in prescribed form 7. Overall time limit for submitting Report 180 days from close of the year. 8. Product Group concept brought in Form-I (for submission of report) 1. Qualified Report- Auditors qualifications, reservations etc. to be given 2. Auditors observations & Suggestions to be given 3. Cost Accounting Standards- compliance to be reported 4. Internal Audit of Cost records- compliance to be reported

Annexure to the Report: 1. Cost Accounting Policy of the company- to be given in detail by the company 2. Product Group (manufactured) shall be as per Central Excise Act Rules

A.G.Anikhindi & Co., Cost Accountants, Kolhapur

3. 4. 5. 6.

Activity Group shall be as per Finance Act/Central Service Tax Rules Abridged Cost Statement (for each Product Group)- new requirement Operating Ratio Analysis- new requirement Financial Position and Ratio Analysis- Additional details required 7. Related Party Transactions Additional details required for normal price and basis thereof 8. Reconciliation of Indirect Taxes- Restructured format Performance Appraisal Report: New requirement (indicative) Analysis of capacity utilization, Productivity/Efficiency, Energy efficiency, Key Costs & Contribution Analysis, Product/service Profitability Analysis, Market/Customer Profitability Analysis, Working Capital & Inventory Management Analysis, 8. Manpower Analysis, 9. Impact of IFRS on Cost Structure, Cash flow, Profitability, 10. Application of Management Accounting Tools.
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2. 3. 4. 5. 6. 7.

Frequency of above report to be decided by the Company B) The Companies (Cost Accounting Records) Rules 2011 notified on 03/06/2011 (in supersession of earlier 36 Cost Accounting Records (Industry specific) Rules applicable from 01/04/2011. Highlights: 1. New definitions- Compliance Report, Manufacturing Activity, Mining Activity, Processing Activity, Product, Product Group, Production Activity- needs attention 2. As per above definitions almost everything is covered. 3. Application- Every company with Aggregate Net Worth as on 31/03/2011 exceeds Rs.5 crores OR, Aggregate value of turnover of company from sale or supply of all products/services for 2010-11 exceeds Rs.20 crores OR c. Listed company or in the process of listing
a. b.

4. Every company shall maintain cost records to determine cost of production, cost of operation, cost of sales, margin for each product and activity 5. All cost records shall be maintained regularly on Monthly/Quarterly/Halfyearly/Annual basis.
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Cost Accounting Principles and Standards to be followed

A.G.Anikhindi & Co., Cost Accountants, Kolhapur

7. All records shall be kept for 8 years

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Compliance Report, duly certified by Cost Accountant (Permanent Employee or Practicing as per CWA Act) shall be submitted to Central Govt. within 180 days from close of the year.

9. Compliance Report includes almost all Audit Points 10. Annexure to Compliance Report to be approved by Board of Directors includes summary of Quantitative Information and Profit Reconciliation C) Cost Audit Order dated 02/05/2011
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Specifies mandatory Cost Audit for every company covered under 8 Cost Accounting Record Rules (viz. Bulk Drugs, Formulations, Fertilizers, Sugar, Industrial Alcohol, Electricity Industry, Petroleum Industry, Telecommunications) with
a. b.

Aggregate Net Worth as on 31/03/2011 exceeds Rs.5 crores OR, Aggregate value of turnover of company from sale or supply of all products/services for 2010-11 exceeds Rs.20 crores OR

c. Listed company or in the process of listing D) Cost Audit Order dated 03/05/2011 1. Specifies mandatory Cost Audit for every company covered under 6 Cost Accounting Record Rules (viz. Cement, Tyres & tubes, Steel Plant, Steel Tubes & Pipes, Paper, Insecticides) with a. Aggregate value of turnover of company from sale or supply of all products/services for 2010-11 exceeds Rs.100 crores OR b. Listed company or in the process of listing

E) Cost Audit Order dated 30/06/2011

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Specifies mandatory Cost Audit for every company covered under 8 Cost types of Industries (viz. Cement -CET Ch.25, 38, 68, Tyres & Tubes Ch.40, Steel- Ch.72, 73, Paper-Ch.47,48, Insecticides- Ch.38, Glass-Ch.70, Paints/Varnishes-Ch.32, Aluminium-Ch.76) with
a.

Aggregate value of turnover of company from sale or supply of all products/services for 2010-11 exceeds Rs.100 crores OR

A.G.Anikhindi & Co., Cost Accountants, Kolhapur

b. Listed company or in the process of listing F) General Circular dt. 11/04/2011 issued by MCA applicable from the year 2011-12
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Specifies revised procedure for Appointment of Cost Auditors and Approval thereof. Form 23C to be filed within 90 days from beginning of the year i.e. by 29 th June every year.

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3. Deemed approval within 30 days of filing if no back query is received. 4. Company shall issue formal letter of appointment to Cost Auditor.
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Cost Auditor shall inform (form 23D) Central Govt. within 30 days of receipt of letter.

6. Company shall disclose full particulars of Cost Auditor with due date and actual date of filing of Report in Annual Report . G) Cost Accounting Standards (CAS 1 to CAS 12) are mandatory from the year 2010-11. A.G.Anikhindi & Co. Cost Accountants

A.G.Anikhindi & Co., Cost Accountants, Kolhapur