Maintenance of Cost Records

What is Cost Record?

As per Companies (Cost Records and Audit) Rules, 2014, Cost Records” means books of account relating to utilisation of materials, labour and other items of cost as applicable to the production of goods or provision of services as provided in section 148 of the Companies Act and these rules with tie following headings:

(1)Material Cost,
(2) Employee Cost,
(3) Utilities,
(4) Direct Expenses,
(5) Repair and Maintenance,
(6) Fixed Assets and Depreciation,
(7) Overheads,
(8) Administrative Overheads,
(9) Transportation Cost,
(10) Royalty and Technical Know-how,
(11) Research and Development expenses,
(12) Quality Control Expenses,
(13) Pollution Control Expenses,
(14) Service Department Expenses,
(15) Packing Expenses,
(16) Interest and Financing Charges,
(17) Any other item of Cost,
(18) Capacity Determination,
(19) Work-in-progress and finished stock,
(20) Captive Consumption,
(21) By-Products and Joint Products,
(22) Adjustment of Cost Variances,
(23) Reconciliation of Cost and Financial Accounts,
(24) Related Party Transactions,
(25) Expenses or Incentives on Exports,
(26) Production records,
(27) Sales records,
(28) Cost Statements,
(29) Statistical Records,
(30) Records of Physical Verification.

Who are Required to Maintain Cost Records?

For the purpose of sub-section (1) of Section 148 of the Companies Act, the class of companies, including foreign companies defined in clause (42) of section 2 of the Act, engaged in the production of the goods or providing services, having an overall turnover from all its products and services of rupees thirty-five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account,namely:-

(A) Regulated Sectors- 6 different class of industries
(B) Non-regulated Sectors- 33 different class of industries




Statutory Requirement to maintain Cost Records.

In exercise of the powers conferred by sub-sections (1) and (2) of section 469 and section 148 of the Companies Act, 2013 (18 of 2013) and in supersession of Companies (Cost Accounting Records) Rules, 2011; Companies (Cost Audit Report) Rules, 2011; Cost Accounting Records(Telecommunication Industry) Rules, 2011; Cost Accounting Records (Petroleum Industry) Rules, 2011; Cost Accounting Records (Electricity Industry) Rules, 2011; Cost Accounting Records (Sugar Industry) Rules, 2011; Cost Accounting Records (Fertilizer Industry) Rules, 2011 and Cost Accounting Records (Pharmaceutical Industry) Rules, 2011, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely Companies (Cost Records and Audit) Rules, 2014