The companies act, 2013 has come into existence on 29.08.2013 that replaces a nearly six decade-old legislation and overhauls the way corporate function and are regulated in the country.
This article contains the description of some provisions related to cost audit as per companies Act, 2013.
When cost audit is required:-Central government may direct to conduct cost audit in respect of companies engaged in the production of such goods or providing such services and have a net worth or turnover as may be prescribed.
Note: If company is regulated by any special act then central government can direct to conduct cost audit only after consulting with regulatory body constituted under special act.
Appointment of cost auditor:-Cost auditor shall be appointed by board whereas remuneration of cost auditor shall be determined by members.
Who can be appointed as cost auditor:-Cost audit shall be done by cost accountant in practice.
Qualifications, disqualifications, rights and duties of cost auditor:-Cost auditor shall have same qualifications, disqualifications, rights and duties as that of a company auditor. Further, it is the duty of cost auditor to comply with cost auditing standards and to submit his report to BOD.
Duty of company:-After receiving the cost audit report, company shall furnish full information and explanations on every reservations or qualifications to CG within 30 days of receipt of cost audit report. If CG requires any further information then it is the duty of company to furnish such information within given time.
Punishment for contravention in case of company:-If company contravenes any of the above mentioned provisions then company shall be punishable with fine of Rs. 25,000 to Rs. 5, 00,000 and officers of company shall be liable for fine of Rs. 10,000 to Rs. 1, 00,000 or imprisonment for a term which may extend to 1 year.
Punishment for contravention in case of cost auditor-If Cost auditor contravenes any of the above mentioned provisions unknowingly then he shall be punishable with fine of Rs. 25,000 to Rs. 5, 00,000. Whereas, he contravenes any of the above mentioned provisions knowingly then he shall be punishable with fine of Rs. 1,00,000 to Rs. 25,00,000 along with imprisonment for a term which may extend to 1 year. Further, he shall be liable to refund the remuneration and pay damages to company.
(Author -Abhilash Singh –