CRA Editions
BACA Intellect Series – CRA Edition 4
Jan 15th
Cost Audit Report
Dear Professional Colleague
Submission of Cost Audit Report to the Board of Directors
As per Section 148 (5) of the Companies Act, 2013 read with Rule 6(5) of the Companies (Cost Records & Audit) Rules, 2014, the Cost Auditor is required to forward its Cost Audit Report to the Board of Directors of the company within a period of one hundred and eighty days from the closure of the financial year.
Format of Cost Audit Report
As per Rule 6(4) of the Companies (Cost Records & Audit) Rules, 2014, the Cost Auditor is required to submit Cost Audit Report along reservations/ qualifications/ observations/ suggestions, if any, in Form CRA-3.
Examination of Cost Audit Report by the Board of Directors
As per Rule 6(5) of the Companies (Cost Records & Audit) Rules, 2014, the Board of Directors is required to examine Cost Audit report particularly any reservation or qualification contained therein.
Filing of Cost Audit Report with the Central Government
As per Section 148 (6) of the Companies Act, 2013, the Company is required to file a copy of the Cost Audit report, alongwith full information and explanation on every reservation or qualification with the Central Government within a period of thirty days from the date of its receipt.
Form of Filing Cost Audit Report
As per Rule 6(6) of the Companies (Cost Records & Audit) Rules, 2014, the Cost Auditor is to be filed as an attachment to Form CRA-4 alongwith specified fees.
Calling for further information by Central Government
As per Section 148 (7) of the Companies Act, 2013, If, after considering the Cost Audit report and the information and explanation furnished by the company, the Central Government is of the opinion that any further information or explanation is necessary, it may call for such further information and explanation and the company shall furnish the same within such time as may be specified by the Government.
BACA Intellect Series – CRA Edition 3
Jan 14th
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:
- a body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008;
- an officer or employee of the company;
- a person who is a partner, or who is in the employment, of an officer or employee of the company;
- 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;
- 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)
- a person whose relative is a director or is in the employment of the company as a director or key managerial personnel;
- 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;
- 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.
BACA Intellect Series – CRA Edition 2
Jan 13th
Procedure of Appointment of Cost Auditor
Procedure of appointment
As per Rule 14 of the Companies (Auditors & Audit) Rules, 2014, the Cost Auditor shall be appointed in the following manner:
(a) in the case of companies which are required to constitute an audit committee, the Board of Directors shall appoint Cost Auditor on the recommendations of the Audit committee.
(b) in the case of other companies which are not required to constitute an audit committee, the Board of Directors shall appoint Cost Auditor.
Remuneration of the Cost Auditor
Section 148 (3) of the Companies Act, 2013 requires that the remuneration of the Cost Auditor shall be determined by the members in a prescribed manner.
Manner of determination of remuneration
As per Rule 14 of the Companies (Auditors & Audit) Rules, 2014, the remuneration of Cost Auditor shall be determined in the following manner:
(a) The remuneration of Cost Auditor shall be recommended by the Audit Committee in the case of companies which are required to constitute an Audit Committee. The remuneration recommended by the Audit Committee shall be considered and approved by the Board of Directors and ratified by the shareholders subsequently.
(b) In the case of other companies which are not required to constitute an Audit Committee, the Board of Directors shall determine the remuneration of Cost Auditor which shall be ratified by shareholders subsequently.
BACA Intellect Series – CRA Edition 1
Jan 13th
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 .