Description

📘 Cost Records & Audit – As Per Companies Act, 2013

As per Companies (Cost Records and Audit) Rules, 2014, every eligible company engaged in the production of goods or provision of services must maintain detailed cost records if their turnover exceeds ₹35 crore in the preceding financial year.

These rules apply to Indian and foreign companies under Section 148 of the Companies Act, 2013.

📒 What Are Cost Records?

Cost Records refer to books of account maintained to track:

• Material usage
• Labour cost
• Utilities
• And other cost components involved in production or service delivery

These records must be kept in detail under the following 30 cost elements:

1. Material Cost
2. Employee Cost
3. Utilities
4. Direct Expenses
5. Repair & Maintenance
6. Fixed Assets & Depreciation
7. Overheads
8. Administrative Overheads
9. Transportation Cost
10. Royalty & Technical Know-how
11. R&D Expenses
12. Quality Control Expenses
13. Pollution Control Expenses
14. Service Department Expenses
15. Packing Expenses
16. Interest & Financing Charges
17. Other Items of Cost
18. Capacity Determination
19. Work-in-Progress & Finished Stock
20. Captive Consumption
21. By-Products & Joint Products
22. Cost Variance Adjustment
23. Reconciliation of Cost & Financial Accounts
24. Related Party Transactions
25. Export Expenses or Incentives
26. Production Records
27. Sales Records
28. Cost Statements
29. Statistical Records
30. Records of Physical Verification

🏢 Who Is Required to Maintain Cost Records?

As per Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the following class of companies must maintain cost records if overall turnover is ₹35 crore or more:

✅ (A) Regulated Sectors (6 Classes)

Examples:

• Electricity
• Petroleum
• Telecommunication
• Drugs & Pharmaceuticals
• Fertilizers
• Sugar

✅ (B) Non-Regulated Sectors (33 Classes)

Examples:

• Cement
• Steel
• Textile
• Paper
• Automotive
• Construction
• FMCG
• IT services
  (Full list as per Schedule of Rules)

⚖️ Statutory Compliance Requirement

These rules are notified under:

• Section 148 of the Companies Act, 2013
• Sub-sections (1) & (2) of Section 469

The rules supersede earlier cost record rules like:

• Companies (Cost Accounting Records) Rules, 2011
• Industry-specific cost rules (Telecom, Petroleum, Electricity, etc.)

📑 Our Services Include:

• Maintenance of Cost Records
• Preparation of Cost Audit Reports (CRA-3)
• Filing of CRA-4 with MCA
• Support for Regulated and Non-regulated sectors
• Guidance on applicability & classification

📞 Need help with Cost Records or Cost Audit Compliance?

Let our experts and empanelled CMA professionals guide your business to stay compliant with the Companies Act.

👉 Contact GST Suvidha Centre Now!