1. Section 148(1)
The CG may by order, in respect of class of companies engaged in the production of such goods or providing such services, direct that particulars relating to the utilization of material or labour or to other items of cost shall also included in the books of account kept by that class of company
2. Proviso of section 148(1)
The CG, before issuing such order in respect of any class of companies regulated a Special Act, consult the regulatory body established under such special act.
3. Classes of Company Section 148(2)
Every company specified in item A of rule 3 shall get its cost records Audited in accordance with these rule if during the immediately previous financial year-
a. Overall annual turnover of the company from all its products and services is Rs. 50 Cr. or more and
b. the aggregate turnover of individual product or products or services for which the cost records are required to be maintained is rupees 25 Crore or more;
Every company specified in item B of rule 3 shall get its cost records Audited in accordance with these rule if during the immediately previous financial year-
a. Overall annual turnover of the company from all its products and services is Rs. 100 Cr. or more and
b. the aggregate turnover of individual product or products or services for which the cost records are required to be maintained is rupees 35 Crore or more;
The requirement for cost audit under these rules shall not apply to a company which is covered in Rule 3 and
1. Whose revenue from exports, in foreign exchanges, exceeds 75% of its total revenue.
2. Which is operating from a SEZ.
3. Which is engaged in generation of electricity for captive consumption through generating plant. For this purpose the term captive generating plant shall have the same meaning as assigned in rule 3 of electricity Rules 2005.
4. Section 148(3) Appointment and Remuneration of Cost Auditor
Cost Audit shall be conducted by the cost auditor who shall be appointed by the Board.
Remuneration of Cost Auditors
In case of Companies required to constitute Audit committee then the Audit committee shall recommend the appointment and remuneration of Cost Auditors and Board & shareholders shall Approve the same.
In any other case the Board shall appoint an individual or firm as cost auditor and the remuneration of such cost auditor shall be ratified by shareholders subsequently.
Company shall intimate the same in Form CRA-2 to the CG within 30 days of the Board Meeting or within 180 Days from the commencement of the FY whichever is earlier.
5 . Proviso to Section 148(3)
A statutory auditor appointed under section 139 shall not be appointed as a Cost Auditor.
6. Compliance of Cost auditing Standards
The Cost Auditor while conducting a Cost Audit shall followed the cost auditing standards issued by the ICWAI.
7. Report to Board
The Cost Auditor shall submit his Cost Audit report to the Board in Form CRA-3 within 180 days from the Closure of the Financial Year.
8. Filling of Cost Audit Report to CG Section 148(7)
Company within 30 days from the receipt of copy of the cost audit report shall furnish the CG in Form CRA-4 along with full information and explanation on every reservation or qualification contained therein. The CG may demand any clarification on the same.
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