Who can be a Cost Auditor?
According to section 148(3) of Companies Act 2013, cost audit shall be conducted by Cost Accountant in Practice who shall be appointed by the Board on such remuneration as determined by the members in such a manner as may be prescribed.
Important Note: No person appointed under section 139 as an auditor of the Company shall be appointed for conducting the audit of cost records
Rule 14 of Companies (Audit and Auditor) Rules, 2014– For purpose of section 148(3), in case of Companies which are required to constitute Audit Committees, the Board shall appoint a Individual who is a Cost accountant in practice or firm of cost Accountant in practice, as cost Auditor on recommendation of Audit Committee who shall also recommend the remuneration of Cost Auditor.
- The remuneration recommended by Audit Committee shall be Considered and approved by Board of Directors and ratified subsequently by Shareholders
- In case of other Companies which are not required to Constitute Audit Committee, the Board shall appoint an individual who is a Cost Accountant in practice or a Firm of cost Accountant in Practice as Cost auditor and remuneration of such Cost Auditor shall be ratified by Shareholders subsequently.
Point to be noted: The Cost Auditor proposed to be appointed is required to give Letter of Consent to the Board of Directors
The Company shall inform the Cost auditor about his appointment and file a notice of appointment with Central Government within a period of 30 days of the Board Meeting in which such appointment is made or within a period of 180 days of the commencement of financial year WHICHEVER IS EARLIER, through electronic mode in Form CRA 2.
Point to be considered: Company has to file form CRA 2 not the Cost Auditor
Important Note : An casual vacancy in the office of Cost Auditor, whether due to resignation, death or removal shall be filed by the Board of Directors within 30 days from date of occurrence of such vacancy and company shall inform Central government in same form CRA 2 within 30 days of appointment of Cost Auditor
Cost Audit Report
- According to section 148(5) of Companies Act 2013, Read with Rule 6(4), a cost auditor is required to submit his cost audit report along with his/ her qualifications, reservations, observations or suggestions if any in form CRA 3 to Board of Directors of the Company within 180 days from closure of financial year to which the report relates.
Point to be noted: For financial year ending 31st March 2016, Cost Audit report has to be submitted within 180 days from 31st March 2016
- According to section 148(6) of Companies Act 2013, Read with Rule 6(6) of Companies Cost records and Audit Rules), every Company to whom Cost Auditor submits his Cost Audit Report shall, within a period of 30 days from date of receipt of cost audit report, furnish with Central Government such report with full information and explanation on every reservation or qualification in form CRA 4.
Important Note: Cost audit report is required to be filed in XBRL format
Point to be Noted: if after Considering the Cost Audit report referred under section 148 and information and explanation furnished by Company under section 148(6), the Central Government is of opinion that further information or explanation is necessary, it may call for such information and explanation and Company shall furnish the same within such time as may be specified by the Government.
