Directors Responsibility For Maintenance of Cost Records Under Section 148 with Section 134 of Companies Act 2013
Section 148 and Section 134 of the Companies Act 2013 both deal with the responsibility of directors regarding the maintenance of cost records. The following outlines the key responsibilities of directors in compliance with these sections:
1. Appointment of Cost Auditor: Under Section 148 of the Companies Act, 2013 the board of directors must appoint a cost auditor to audit the cost records of the company. Under Section 134 of the Companies Act, the board of directors must appoint an auditor to audit the financial statements of the company, including the cost records.
2. Preparation of Cost Records: The directors must ensure that the cost records of the company are maintained and prepared in accordance with the Cost Accounting Standards (CAS) issued by the Institute of Cost Accountants of India, as required by Section 148 of the Companies Act. Additionally, under Section 134 of the Companies Act, the directors must ensure that the financial statements of the company are prepared in accordance with the applicable accounting standards.
3. Timely Preparation and Filing of Cost Audit Report: Under Section 148 of the Companies Act, the directors must ensure that the cost audit report is prepared by the cost auditor and filed with the Registrar of Companies (RoC) within 180 days from the end of the financial year. Under Section 134 of the Companies Act, the directors must ensure that the financial statements of the company are prepared and filed with the RoC within the prescribed time limits.
4. Compliance with Cost Accounting Standards: As noted above, the directors must ensure that the company complies with the CAS issued by the Institute of Cost Accountants of India, as required by Section 148 of the Companies Act. Compliance with the CAS helps ensure the accuracy and completeness of the cost information, which is an important tool for decision-making and cost control.
5. Review and Approval of Cost Records: The directors must review and approve the cost records of the company before they are submitted for audit, as required by Section 148 of the Companies Act. Additionally, under Section 134 of the Companies Act, the directors must approve the financial statements of the company before they are filed with the RoC.
6. Disclosure Requirements: Under Section 148 of the Companies Act, the cost records and cost audit report must be disclosed in the annual report of the company. Under Section 134 of the Companies Act, the financial statements must be disclosed in the annual report of the company. The disclosure should include details of the cost records maintained, the cost audit report, and any qualifications or observations made by the cost auditor or statutory auditor.
Directors have a crucial role in ensuring that the cost records of the company are accurate, complete, and compliant with the applicable laws and regulations. Failure to comply with these responsibilities can result in penalties and fines, and may also damage the reputation of the company.
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