Cost Audit and Cost Records
In short
- Some companies have to keep cost records, and some of those must also have them audited by a Cost Accountant in practice.
- We give a written view on whether the rules apply, product by product.
- Where they apply, we keep the cost records and, where appointed as cost auditor, carry out the cost audit.
Who it is for
- Companies in the industries listed in the Companies (Cost Records and Audit) Rules, 2014.
- Their finance teams and boards.
- Companies approaching the ₹35 crore turnover mark.
What the rules require
- Cost records: a company in a listed industry keeps cost records once its overall turnover in the previous year was ₹35 crore or more. Micro and small enterprises are outside the rule.
- Cost audit: a company that keeps cost records needs a cost audit only when it also crosses two further limits. Regulated sectors (Table A): overall turnover ₹50 crore or more, and ₹25 crore or more from the listed product or service. Other sectors (Table B): overall turnover ₹100 crore or more, and ₹35 crore or more from the listed product or service.
- Exemptions: some companies keep cost records but need no cost audit, such as those operating from a special economic zone.
- The rules apply only to companies.
This page describes the law for information.
What we do
- Applicability. An assessment under the Companies (Cost Records and Audit) Rules, 2014, product by product.
- Cost records. Cost records in Form CRA-1, reconciled with the audited financial statements.
- Cost audit. The cost audit and the report in Form CRA-3, where appointed as cost auditor.
- Filing support. Support on the company’s CRA-2 intimation (the notice of the cost auditor’s appointment) and CRA-4 filing, and the annexures and cost data for filing.
What you receive
- A written view on whether cost records and cost audit apply, product by product
- Cost records kept in the form the rules require (CRA-1)
- Where a cost audit applies: the report in CRA-3 and the annexures for CRA-4
How the work runs
Whether the rules apply to a company depends on the tariff heading of each product, its turnover and its exemptions. We assess it case by case.
Where the firm acts as cost auditor, it accepts only engagements that meet the independence requirements of the Companies Act, 2013 and the Institute of Cost Accountants of India.
Common questions
Do the Cost Accounting Standards apply if we are not covered by cost audit?
They apply directly where cost records are required, because Form CRA-1 requires records to follow the Cost Accounting Standards and GACAP (Generally Accepted Cost Accounting Principles). Even where they are not mandatory, they give a consistent basis for measuring cost.
We work from the rules in force and from your own records.