Cost Record and Audit – Companies Rule 2014

Main Points
Application Of Cost Records
( First) Companies Engaged In The Production Of Following Goods In Strategic Sectors, Such As:-
  • Machinery And Mechanical Appliances Used In Defence, Space And Atomic Energy Sectors Excluding Any Ancillary Item Or Items.
  • Turbo Jets And Turbo Propellers
  • Arms And Ammunitions
  • Propellant Powders; Prepared Explosives, (Other Than Propellant Powders); Safety Fuses; Detonating Fuses; Percussion Or Detonating Caps; Igniters; Electric Detonators; Radar Apparatus, Radio Navigational Aid Apparatus And Radio Remote Control Apparatus Tanks And Other Armoured Fighting Vehicles, Motorised, Whether Or Not Fitted With Weapons And Parts Of Such Vehicles, That Are Funded

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Above clause shall be applicable only if if the net worth of the company is rupees five hundred crore or more or the turnover is rupees five hundred crore or more

(Second) Companies Engaged In An Industry Regulated By A Sectoral Regulator Or A Ministry Or Department Of Central Government:
Port services 
Aeronautical services 
Telecommunication services 
Generation, transmission, distribution and supply of electricity 
Roads and other infrastructure projects
Drugs and Pharmaceuticals
Fertilisers
Sugar and industrial alcohol
Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board 
Rubber and allied products being regulated by the Rubber Board
 For the purposes of above clause, the thresholds limit shall be as under:- 
(i) in the case of a multi-product or a multi services company, any product or a service for which the individual turnover is rupees fifty crore or more; 
(ii) in the case of a company, producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more.

In the case of companies engaged in an industry regulated by a sectoral regulator, the requirements of sectoral regulator regarding cost records shall be taken into account.

(Second) Companies operating in areas involving public interest such as: 

Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical traffic signalling equipment’s of all kind
Mineral products including cement
Ores
Mineral fuels (other than Petroleum), mineral oils etc
Base metals
Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals
Jute and Jute Products
Edible Oil under Administrative Price Mechanism
Construction Industry
Companies engaged in health services viz. functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories
Companies engaged in education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business. 
For the purposes of above clause the thresholds limit shall be as under:-
(i) In the case of a multi-product or a multi services company  any product or a service for which the individual turnover (from such specific product or such specific service) is rupees fifty crore or more; 
(ii) In the case of a company producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more.

(Others) Companies (including foreign companies other than those having only liaison offices) engaged in the production, import and supply or trading of following medical devices, namely:- 
Cardiac Stents
Drug Eluting Stents
Catheters
Intra Ocular Lenses
Bone Cements
Heart Valves
Orthopaedic Implants
Internal Prosthetic Replacements
Scalp Vein Set
Deep Brain Stimulator
Ventricular peripheral Shud
Spinal Implants
Automatic Impalpable Cardiac Deflobillator
Pacemaker (temporary and permanent)
patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device
Cardiac Re-synchronize Therapy 
Urethra Spinicture Devices
Sling male or female
Prostate occlusion device
Urethral Stents
For the purposes of above clause the thresholds limit shall be as under:-
(i) in the case of a company engaged in multiple products, any product or device for which the individual turnover (from such specific product or device) is rupees ten crore or more, or one third of the turnover, whichever is less. 
(ii) (ii) in the case of a company engaged in one specific product or device, if it has net worth of rupees one hundred and fifty crore or more or the turnover is rupees twenty five crores or more;

Applicability for cost audit

Every company engaged in a strategic industry and covered under (First) shall be required to get its cost records audited in accordance with these rules.

In the case of a multi-product or a multi services company specified in(Second) , the requirement for cost audit shall apply to a product or a service for which the individual turnover (from such specific product or such specific service) is rupees one hundred crore or more; 

In the case of a company producing any one specific product or service specified in (Second), the requirement for cost audit shall apply if the net worth of the company is rupees five hundred crore or more or the turnover from such product or such service is rupees one hundred crore or more.

In the case of a company engaged in medical products or devices referred to in (Others) 

which has multiple products or devices (i.e. a company producing, importing and supplying or trading in more than one medical device or product), the requirement for cost audit shall apply to a medical device or product for which the individual turnover (from such specific medical device or product) is rupees ten crore or more, or one third of the turnover, whichever is less
which has only one product or device (i.e. a company producing, importing and supplying or trading one medical device or product), the requirement for cost audit shall apply if the net worth of the company is rupees one hundred fifty crores or more or the turnover is rupees twenty five crores or more.

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