Applicability of Cost Audit – Pharmaceutical Industry

• Cost Audit is applicable to:
  • Companies engaged in manufacturing, production or processing of goods or services.
  • Both Private Limited & Public Limited Companies are covered.

• These Companies are covered under Cost Audit if any of the following criteria is fulfilled:
  • Company Listed on Stock Exchange, or
  • Net worth exceeds Rs. 5 crores, or
  • Turnover of the company exceeds Rs. 20 crores

• Cost Audit is mandatory for the financial year 2011-12 and onwards.

(If a company is covered once on the basis of above criteria, the Cost Audit will remain mandatory even if turnover of the company is reduced in the subsequent years)

• Companies whose Cost Audit Orders were issued on case to case basis as per earlier Rules, shall continue to be covered under Cost Audit whether they fulfill the above criteria or not.

• Activities covered under Pharmaceutical Industry

Chapters 29 and 30 of Central Excise & Tariff Act, 1985 or

Production, processing, or manufacturing of bulk drugs or formulations and includes the meaning assigned to them under the Drugs (Prices Control) Order 1995

Cost Accounting Records:

• Cost Accounting Records are to be maintained as per Cost Accounting Records (Pharmaceutical Industry) Rules, 2011, and
• Cost Accounting Standards issued by the Institute of Cost Accountants of India.

(Presently CAS 1-18 have been issued)

• Cost Accounting Records are required to be maintained for atleast 8 financial years.

Cost Audit Report:

• It is to be prepared on the basis of Cost Audit Report Rules, 2011

Submission of Cost Audit Report:

• It is to be submitted online to Ministry of Corporate Affairs.
• If Company is following April to March financial year, then the Cost Audit Report for the Financial year 2013-14 is required to be submitted by 27^th September, 2014 (i.e., 180 days from the close of financial year)