Dear All, The Companies (Cost Records & Audit ) Amendment Rules 2014 has been notified w.e.f. 31st December 2014 and all Stake holders have received New year gift from Hon. Minister of Finance and Corporate Affairs - Shri. Arun Jaitelyji. Majority of the suggestions given by the expert group and National Advisory Committee have been incorporated. I have briefly analyzed the same and produced below: The suggestions given by all the Stake Holders including industries, Cost Accountants, Professionals, Consumers & Govt. Departments have been incorporated and suitable amendments have been made in The Companies (Cost Records & Audit) Rules 2014. 1. Earlier “Strategic Sectors”, Industries regulated by “Sectoral Regulator or a Ministry or Department of Central Government” OR “Companies operating in areas involving Public Interest” OR Companies (including foreign companies other than those having only liaison offices) engaged in the production, import and supply or trading of following medical devices, were the criteria’s which might have caused interpretative issues and therefore corrected and classified into only Two Broad Categories : a. Regulated b. Non-Regulated 2. All products are aligned with Specified Tariff Heading of Central Excise Tariff Act 1985 to avoid any disputes of coverage & Scope of Work under the said rules. 3. Following Sectors have been added thereby increasing the scope of Cost Accounting Records & Cost Audit : a) Coffee & Tea Covered under Chapter Heading 0901 to 0902 (All products) b) Milk Powder Covered under Chapter Heading 0402 (All Products) c) Insecticide Covered under Chapter Heading 3808 (All Products) d) Plastic & Polymers Covered under Chapter Heading 3901 to 3914; 3916 to 3921; 3925 (All Products) e) Tyres & Tubes Covered under Chapter Heading 4011 to 4013 (All Products) f) Paper Covered under Chapter Heading 4801 to 4802 (All Products) g) Textiles Covered under Chapter Heading 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5310; 5101 to 5408; 5501 to 5516 (All Products) h) Glass Covered under Chapter Heading 7003 to 7008; 7011; 7016 (All Products) i) Other Machinery Covered under Chapter Heading 8403 to 8487 (All Products) j) Electricals or Electronic Machineries Covered under Chapter Heading 8501 to 8507, 8511 to 8512; 8514 to 8515; 8517; 8525 to 8536; 8538 to 8547 (All Products) k) Articles of Steel Covered under Chapter Heading 7301 to 7326 (All Products) The maintenance of Cost Accounting Records & Cost Audit will be applicable to above sectors from the F.Y. starting on or after 1st April 2015. However in the said year, data w.r.t. 2014-15 also will have to be given in the reports of 2015-16 and hence companies will have to maintain records for the year 2014-15. 4. Threshold limit for applicability of maintenance of Cost Accounting Records and Cost Audit has been revised and there is no threshold limit having net Worth Criteria. Regulatory Non-Regulatory Maintenance of Cost Accounting Records Gross Turnover of Companies covering products & services Rs. 35 Cr. Gross Turnover of Companies covering products & services Rs. 35 Cr. Cost Audit 1. Gross Turnover of Companies covering products & services Rs. 50 Cr. And 2. Turnover of individual products / Services covered for Maintenance of Cost Records – Rs. 25 Cr 1. Gross Turnover of Companies covering products & services Rs. 100 Cr. And 2. Turnover of individual products / Services covered for Maintenance of Cost Records – Rs. 35 Cr No Cost Accounting records will be required to maintained by the companies which is classified as a Micro Enterprise or a Small Enterprise including as per the Turnover Criteria under Sub Section 9 of Section 7 of MSMED Act 2006 Cost Audit will not be applicable to those companies whose revenue from exports in Foreign Exchange exceeds 75% of total revenue OR which is operating from SEZ 5. Earlier CRA-1 has been replaced and the principles of Cost Accounting Standards and Generally Accepted Accounting Practices (GAAP) has been reproduced under different categories like material, labour, overheads, utilities etc. 6. Maintenance of individual cost sheet with the companies for the 8 years is mandatory and to be kept with the company and the same has to be certified in the Cost Audit Report. 7. Earlier 24 paras have been replaced with 6 paras, which are mainly aligned with present format of XBRL. Moreover, cost statements for service industries have been added. 8. Cost Sheet has to be appended to the Cost Audit Report based on Tariff Heading and not for individual products. 9. Turnover reported in Return of Central Excise and Service Tax has to be reconciled with turnover of financial accounts and hence responsibility of Cost Auditors have been substantially enhanced. 10. Para pertaining to General information, Related Party Transaction, Abridged Cost Statement, Quantitative Information, Indirect Tax Reconciliation has been in the same line subject to minor modifications has been in the line with earlier Companies (Cost Audit) Rules 2011. 11. Product and service profitability statement for product groups (tariff heading wise) needs to be given. This is the additional task for Cost Auditors. 12. Though Cost Maintenance of Cost Accounting Records are mandatory for specified industries, requirement of Compliance Certificate has been dispensed with. 13. Comparison of applicability of maintenance of Cost Accounting Records and Cost Audit is annexed hereto and changes have been incorporated in Red colour. I extend my sincere thanks to all members of National Advisory Committee, Expert Group, President and any other person who were instrumental to bring back the substantial scope of Cost Accountants. With Warm Regards, CMA
Posted on: Fri, 02 Jan 2015 17:07:01 +0000
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