Cost and management

accounting
Provision of companies act 2013 for
cost audit
By Suzanth
 Index
• Introduction
• Importance of cost audit
• Provision related to cost audit
• Applicability of cost audit
 Introduction

A cost audit represents the verification of

cost accounts and checking on the
adherence to cost accounting plan. Cost
audit ascertains the accuracy of cost
accounting records to ensure that they are in
conformity with cost accounting principles,
.plans, procedures and objectives
 Importance of cost accounting

• Verification of the cost accounting records such

as the accuracy of the cost accounts, cost reports,
cost statements, cost data and costing technique
• Examination of these records to ensure that they
adhere to the cost accounting principles, plans,
procedures and objective
• To report to the government on optimum
utilisation of national resources
 Provision relating to cost audit
Cost Audit shall be done by a Cost Accountant
Consent Letter and Eligibility Certificate shall be taken from the Cost Auditor
No person appointed under section 139 as an auditor of the company shall be appointed for conducting
the audit of cost records:
Cost Auditor shall be appointed by the Board within 180 days from the commencement of financial year.
Every company file a notice of such appointment within a period of 30 days of the Board meeting in
which such appointment is made or within a period of 180 days of the commencement of the financial
year, whichever is earlier, through electronic mode, in #Form CRA-2
• Remuneration of Cost Accountant shall be determined by the Members
 Applicability for Cost Audit
Every company specified in item (A) of
rule 3 shall get its cost records audited if
the overall annual turnover of the
company from all its products and
services during the immediately preceding
financial year is rupees fifty crore or more
and the aggregate turnover of the
individual product or products or services
for which cost records are required to be
maintained under rule 3 is rupees twenty
five crore or more.
Every company specified in item (B) of rule 3 shall get
its cost records audited in accordance with these rules
if the overall annual turnover of the company from all
its products and services during the immediately
preceding financial year is rupees one hundred crore or
more and the aggregate turnover of the individual
product or products or service or services for which
cost records are required to be maintained under rule 3
is rupees thirty five crore or more.
 Conclusion

A cost audit is concerned with the verification of cost records/accounts and

acts as a check on the adherence to cost auditing standards. Section 148 of
the Companies Act 2013 confers powers on the Central Government to
direct certain classes of companies to get their cost records maintained and
audited by a cost accountant.