Dear Professional Colleague,

Disqualifications:

Section 148 (5) of the Companies Act, 2013 read with Section 141(3) and Rule 10 of Companies (Auditors & Audit) Rules prescribes the disqualifications of the appointment of Cost Auditor.

The following persons shall not be eligible for appointment as Cost Auditor:

1. a body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008;
2. an officer or employee of the company;
3. a person who is a partner, or who is in the employment, of an officer or employee of the company;
4. a person who, or his relative or partner—
• is holding any security of or interest in the company / its subsidiary / holding / associate company or a subsidiary of such holding company: (Provided that the relative may hold security or interest in the company of face value not exceeding Rupees One Lac)
• is indebted to the company / its subsidiary / holding / associate company or a subsidiary of such holding company, in excess of Rupees Five Lacs; or
• has given a guarantee or provided any security in connection with the indebtedness of any third person to the company / subsidiary / holding / associate company or a subsidiary of such holding company, in excess of Rupees One Lac; or;
5. a person or a firm who, whether directly or indirectly, has business relationship (any transaction for commercial purpose*) with the company / its subsidiary / holding / associate company or subsidiary of such holding company / associate company. (*except commercial transactions in the nature of professional services or commercial transactions which are in the ordinary course of business of the company at arm’s length price – like sale of products or services to the auditor, as customer, in the ordinary course of business, by companies engaged in the business of telecommunications, airlines, hospitals, hotels and such other similar businesses)
6. a person whose relative is a director or is in the employment of the company as a director or key managerial personnel;
7. a person who is in full time employment elsewhere or a person / partner of a firm holding appointment as Cost Auditor, if such persons / partner is at the date of such appointment or reappointment holding appointment as Cost Auditor of more than twenty companies;
8. a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction.

Appointment of Cost Auditor

Dear Professional Colleague

Appointment of Cost Auditor

Section 148 (3) of the Companies Act, 2013 prescribes that the Cost Audit shall be conducted by a Cost Accountant in practice who shall be appointed by the Board of Directors.

Due Date of Appointment of Cost Auditor

As per Rule 6(1) of the Companies (Cost Records & Audit) Rules, 2014, the Cost Auditor shall be appointed by the Company within one hundred and eighty days of the commencement of every financial year.

Intimation of Appointment to the Central Government

As per Rule 6(2) of the Companies (Cost Records & Audit) Rules, 2014, the Company shall file a notice of such appointment with the Central Government within a period of thirty days of the Board meeting in which such appointment is made or within a period of one hundred and eighty days of the commencement of the financial year, whichever is earlier, through electronic mode, in form CRA-2, alongwith the specified fee.

Extension of date of filing Intimation of Appointment

As per General Circular No.42/2014 issued by MCA dated 12th November, 2014, considering the non-availability of Form CRA-2 on MCA website, the date of its filing has been extended without any penalty/late fee upto 31st January, 2015. The form is expected to be available at MCA website soon.

Validity of Form 23-C already filed for Financial year 2014-15

As per General Circular No.42/2014 issued by MCA dated 12th November, 2014, the Companies who had already filed Form 23-C for the Financial Year 2014-15 before the Form CRA-2 was made mandatory on 30th June, 2014, need not file Fresh Form CRA-2 for the financial year 2014-15 .