Quick Summary
Cost Audit is the verification of cost accounts and a check on the adherence to cost accounting standards applicable to certain industries.
Cost Audit is governed by Section 148 of the Companies Act, 2013 and Cost Audit Rules. It involves detailed checking of cost records maintained by companies engaged in production, processing, manufacturing, or mining activities.
Applicability
- Specified industries as notified by government
- Companies engaged in production/processing/manufacturing/mining
- Annual turnover from individual product/services ≥ ₹50 crores (if aggregate turnover ≥ ₹100 crores)
- Or as specified in Cost Audit Orders
Who Conducts
- Cost Accountant in Practice (CMA)
- Appointed by Board on recommendation of Audit Committee
- Remuneration fixed by Board/Shareholders
Cost Records
- Companies must maintain cost records as per Cost Accounting Standards
- Form CRA-1 specifies cost records to be maintained
- Relates to utilization of materials, labor, and other items of cost
Reporting
- Cost Auditor submits Cost Audit Report in Form CRA-3
- Due date: Within 180 days from close of financial year
- Company files CRA-4 with ROC within 30 days of receipt
Key Points
- For specified industries
- Conducted by Cost Accountant (CMA)
- Report in Form CRA-3
- Due within 180 days of FY close
- Covers cost records and efficiency