Difference in applicability of Cost Compliance Report and Cost Audit Report
New Cost Audit Orders and its Comparison with earlier orders
With issue of various circulars, cost audit orders and notifications with regard to Cost Accounting, the MCA has set the stage for collection of the authentic information (duly approved by Bard of Directors and verified by a Cost Accountant) with regard to various industries for use by various Ministries.
Till date there seems to be some confusion with regard to applicability, although through this forum a lot of efforts have been undertaken to create awareness among the accounting/secretarial fraternity.
Now, the companies fulfilling certain criteria are required to file either Cost Compliance Report or Cost Audit Report with Ministry of Corporate Affairs or both. This small article is a step towards bringing clarity on the various questions which we have received from various readers/stakeholders.
Before we provide the difference between the two, please note that presently there seven type of Cost Accounting record Rules which can be categorized into two categories:
b) Industry Specific w.e.f 2012-13 in suppression of earlier relevant rules
Also there are Companies Cost Audit Report Rules 2011
|Cost Compliance Report (CCR)||Cost Audit Report(CAR)|
|1||Applicability||Companies carrying on manufacturing, mining, production or processing activitiesAndFulfilling any one of the following criteria are required to file Cost Compliance Report from the year 2011-12.If all the products are cost audit then only Cost Audit Report is required to be filed||Companies which are required to prepare Cost Records under section 209(1)(d) have to undergo Cost Audit provided cost audit order has been issued in respect of the product/industry to which the company belongs.Broadly, The companies under Industry Specific Rules have to undergo cost audit, if the Turnover is greater than 20 crores or net worth is more than Rs 5 Crores or the company is listedSimilarly, the companies (other than belonging to the Industry Specific Cost Accounting Records Rules) pertaining various industries have been brought under Cost Audit if the turnover is more than 100 crores or company is listed.Please note that the turnover/networth criteria for the year preceeding to the financials year is required to seen for applicability of Cost Audit|
|2||Section Applicable||209(1)(d) of the Companies Act||Section 233B of the Companies Act|
|3||Whether reported under CARO 2003||Yes||No|
|4||Whether reported in 23 AC/23ACA||Yes||Yes|
|5||Who can be appointed for signing the CCR||A cost accountant (fulfilling certain criteria) whether in service of the company or a Practising Cost Accountant||A practicing Cost Accountant/Firm of Cost Accountants|
|6||Time limit of appointment||No Statutory time limit has been prescribed for appointment of Cost Accountant for issue of Cost Compliance Report||Within 90 days of the commencement of the year|
|7||Any statutory form for appointment is required to be filed with MCA||No||Yes, Form 23C is required to be filed with MCA within 90 days of the commencement of the year under cost audit|
|8||Authority, which can appoint Cost Accountant||Any authorized person from Company’s Managment||Board of Directors|
|9||Whether report is to be approved by Board of Directors||Yes||Yes|
|10||When to file the report||Within 180 days of the close of the year||Within 180 days of the close of the year|
|11||Whether report is required to be filed in XBRL||Yes||Yes|
|12||Is there any specific list of the Industries covered||No, The industries covered under Cost Compliance Report have not been listed till date. However the companies falling under the applicability clause given above are required to file the CCR.However, reference can be made to the product group classification codes issued by MCA||Yes the list of Industries/products is available at MCA websitehttp://mca.gov.in/Ministry/cao.htmlPlease refer to the table at annexure 1|
|13||Whether the reports have to be filed plantwise or companywise||Companywise report is required to be filed with MCA||Companywise report is required to be filed with MCA|
|14||Whether any penalties/prosecution is applicable for non-compliance with the provisions of various Cost Accounting Report Rules/ Cost Audit Report Rules||Yes||Yes|
|15||Who will be responsible||All officers-in-default including concerned directors as per Companies Actwill be held responsible||All officers-in-default including concerned directors as per Companies Actwill be held responsible|
Readers are requested to go through the original notifications also.
(Author Navneet Kumar Jain is a Practising Cost Accountant and can be reached at Mobile- 9810175020, Email [email protected])
Details of the different Cost Audit Orders and its applicability are given in the table given below
Please note that the Product or Activity Groups shall include all products/activities included in the corresponding CETA Chapter Headings mentioned therein irrespective of whether Central Excise Duty is levied or not.