M KAMESWARA RAO B.Com., FCMA Cost Accounting Record Rules 2011
Transcript
1. Cost Accounting Record Rules 2011
2. Provisions of Cost Accounting and Cost Audit introduced in
1965 in the Companies Act, 1956. >Section 209(1)(d) Maintenance
of Cost Records. >Section 233 B Audit of Cost Records.
3. To ensure companies keep proper records To inculcate a
culture of cost consciousness among industries For better resource
management To make the efficiency audit possible; and To make cost
data available with the Government.
4. To give Regulatory push to the Indian Companies to attain
highest level of cost management and cost competitiveness To
strengthen the corporate governance mechanism; To fulfil demands of
industry with regard to *simplification of rules, procedures,
structure & formats * removal of discrimination, * addressing
confidentiality and cost data, and * reducing cost compliance
5. To recognise cost accounting standards issued by the ICWAI
to bring uniformity and standardization in cost statements; and To
fulfil requirement of various Government Authorities and regulatory
bodies for availability of cost data of all companies for better
decision making to help the industry and the economy.
6. Separate Rules for each Industry / Product Too much emphasis
on Government mandated Form leaving no room for flexibility with
the Company management. More than one Rule for multi-product
companies A compliance view rather than converting it into a
management tool No mechanism in MCA to know all companies presently
covered under CARR
7. Selective and ad hoc approach led to a sense of
discrimination No cost audit orders in many industries / companies
Companies were required to submit multiple cost audit reports for
each unit & each product separately. Existing Report Rules /
Formats needed simplification Multiple Appointment of cost auditors
for a Company having multiple products under audit
8. Notification No.G.S.R.429(E) dated 3rd June, 2011 Applicable
to every Company including a foreign Company engaged in production,
processing, manufacturing or mining wherein: The aggregate value of
net worth as on the last date of the immediately preceding
financial year exceeds Rs.5 crores, or
9. The aggregate value of the turnover made the company from
all products or activities during the immediately preceding
financial year exceeds Rs.20 crores, or The companys equity or debt
securities are listed or are in the process of listing on any stock
exchange
10. Manufacturing Activity includes any act, process or method
employed in relation to i) transformation of raw materials,
components, sub-assemblies, or parts into semi-finished or finished
products; or ii) making, altering, repairing, fabricating,
generatin g, composing, ornamenting, furnishing, finishing ,
packing, re- packing, oiling, washing, cleaning, breaking- up,
demolishing, or otherwise treating or adapting any product with a
view to its use, sale, transport, delivery or disposal; or
11. iii) constructing, reconstructing, reconditioning,
servicing, refitting, repairing, finishing or breaking up of any
products. Mining Activity includes any act, process or method
employed in relation to the extraction of ores, minerals, oils,
gases or other geological materials from the earths crust,
including sea bed or river bed.
12. Processing Activity includes any act, process, procedure,
function, operation, tech nique, treatment or method employed in
relation to- i) altering the condition or properties of inputs for
their use, consumption, sale, transport, delivery or disposal; or
ii) accessioning, arranging, describing, or storing products; or
Iii) developing, fixing and washing exposed photographic or
cinematographic film or paper to produce either negative image or a
positive image;
13. iv) Printing, publishing, finishing, perforation,trimming,
cutting, or packaging; orv) Pumping oil, gas, water, sewage or any
otherproduct; orvi) Transforming or transmitting, distributingpower
or electricity; orvii) harbouring, berthing, docking,
elevating,lading, stripping, stuffing, towing, handling
orwarehousing products; or
14. Every Company including all units and branches thereof
shall, in respect of each of its financial year commencing on or
after 1st day of April, 2011 keep cost records. Such records shall
be kept on a regular basis in a manner so as to make it possible to
calculate per unit cost of production or cost of operations, cost
of sales and margin for each of its products and activities for
every financial year on monthly/quarterly/half- yearly/annual
basis.
15. The records shall be maintained in accordance with
generally accepted cost accounting principles and cost accounting
standards issued by ICWAI, to the extent these are found to be
relevant and applicable. These records shall also provide necessary
data which is required to be furnished under these rules.
16. COST RECORDS means books of accounts relating to
utilisation of materials, labour and other items of cost as
applicable to the production, processing, manufacturing or mining
activities of the company. The records, cost statements and
reconciliation statements, maintained under these rules shall kept
in good order for a period of 8 years.
17. Compliance Report under CARR Every Company to which either
Companies (Cost Accounting Records) Rules 2011 or any of the 6
Industry specific Rules apply shall submit Compliance Report From
2011-12 by every company for every financial year commencing on or
after 01/04/2011(for 6 regulated industries from financial year
commencing on or after 07/12/2011)
18. Form B prescribed by Government under these rules duly
certified by a Cost Accountant, along with the Annexure to be
submitted to Central Government. The Annexure prescribed with the
compliance report, as certified by the Cost Accountant, shall be
approved by the Board of Directors before submitting the same to
the Central Government by the Company.
19. To be filed by every Company provided all the products /
activities of the company, excluding the exempted categories, are
not covered under cost audit. Within 180 days from close of
financial year Annexures to be authenticated by a Cost Accountant
Report to be approved by the Board of Directors
20. Not applicable to a body corporate governed by a Special
Act Supersedes 36 Cost Accounting Records out of 44 issued till
date Does not apply to activities or products covered under Cost
Accounting Records Rules for: Pharmaceuticals Fertilizers Sugar
Electricity Industry Petroleum Industry Telecommunications
21. CARR 2011 not applicable to companies engaged in Whole sale
Trading Insurance Recreation Retain Trading Education Transport
Service Banking Healthcare Professional Consultancy Financial
Tourism IT & IT Enabled serv. Leasing Travel Research &
Dev. Investment Hospitality Postal/Courier