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January 2012

Cost Accounting Records and Cost Audit Record Rules — Clarifications regarding applicability and compliance requirements.

By Sejal Vasa, Company Secretary
Reading Time 2 mins
The Ministry has issued clarifications vide Circular No. 68/2011, dated 30-11-2011 regarding cost accounting records and cost audit wherein it is clarified that:
    1) Companies covered under Companies Cost Accounting Records Rules, 2011 are only required to file a compliance report in Form B notified in the Circular and not details of cost records.

    2) Companies falling under the said Rules 2011 for the first time shall keep cost records and cost details, statements, schedules, etc. in good order for the next eight financial years beginning with first year of application of the said Rules.

    3) To maintain the appointment of Cost Auditor under the rules as independent and at arm’s length, it is clarified that cost auditor(s) appointed u/s.233B(2) of the Companies Act, 1956 (whether for one or all of the company’s products covered under cost audit), shall not provide any other services to the company relating to

i) design and implementation of cost accounting system; or

ii) the maintenance of cost accounting records, or

iii) act as internal auditor, whether acting individually, or through the same firm or through other group firms where he or any partner has any common interest.

However it is clarified that cost auditors are allowed to certify the compliance report or provide any other services as may be assigned by the company, but which shall not include any of the services mentioned above.

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