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 company’s 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 earth’s
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; or
v) Pumping oil, gas, water, sewage or any other
product; or
vi) Transforming or transmitting, distributing
power or electricity; or
vii) harbouring, berthing, docking, elevating,
lading, stripping, stuffing, towing, handling or
warehousing 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
