MAINTENANCE OF COST ACCOUNTING RECORDS

MAINTENANCE OF COST ACCOUNTING RECORDS

1.     As per notification issued by Ministry of Corporate Affairs, dated 3^rd June, 2011; The Companies (Cost Accounting Records), Rules 2011 shall apply to every company, including a foreign company as defined under section 591 of the Company Act,1956 , which is engaged in the production, processing, manufacturing or mining activities, if any of the following condition is satisfied

a.     The aggregate value of net worth as on the last date of  the immediately preceding financial year exceeds 5 crores of rupees; OR

b.      The aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year exceeds 20 crores of rupees; OR

c.      The Company’s equity or debt securities are listed or are in the process of listing on any stock exchange, whether in India or Outside India.

2.     Every company to which The Companies (Cost Accounting Records), Rules 2011 apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the 1^st day of April, 2011, keep cost records.

3.     The cost records referred to in sub-rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on Monthly / Quarterly / Half-Yearly / Annual basis.

4.     The cost records shall be maintained in accordance with the Generally Accepted Cost Accounting Principles (GACAP) and Cost Accounting Standards (CAS) issued by The Institute of Cost Accountants of India (earlier known as The Institute of Cost & Works Accountants of India); to the extent these are found to be relevant and applicable. The variations, if any, shall be clearly indicated and explained.

5.      The Cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs with a view to achieve optimum economies in utilization of resources. These records shall also provide necessary data which is required to be furnished under these rules.

6.     All such cost records and cost statements, maintained under these rules shall be reconciled with the audited financial statements for the financial year specifically indicating expenses or incomes not considered in the cost records or statements so as to ensure accuracy and to reconcile the profit of all product groups with the overall profit of the company. The variations, if any, shall be clearly indicated and explained.

7.     All such cost records and cost statements and reconciliation statements  maintained under these rules, relating to a period of not less than eight financial years immediately preceding a financial year or where the company had been in existence for a period less than eight years, in respect of all the preceding years shall be kept in good order.

8.     It shall be the duty of every person, referred to in sub-section (6) and (7) of section 209 if the Companies Act, 1956 (1 of 1956), to take all reasonable steps to secure compliance by the company with the provision of these rules in the same manner as he is liable to maintain accounts required under sub-section (1) of section 209 of the said Act.

9.     List of Industries to whom The Companies (Cost Accounting Records) Rules, 2011 not apply

Sr. No.	Name of Industry	Applicable CARR
1	Bulk Drugs	Cost Accounting Records (Bulk Drugs) Rules,1974
2	Formulations	Cost Accounting Records (Formulations) Rules,1988
3	Fertilizers	Cost Accounting Records (Fertilizers) Rules1993
4	Sugar	Cost Accounting Records (Sugar) Rules,1997
5	Industrial Alcohol	Cost Accounting Records (Industrial Alcohol) Rules,1997
6	Electricity Industry	Cost Accounting Records (Electricity Industry) Rules,2001
7	Petroleum Industry	Cost Accounting Records (Petroleum Industry) Rules,2002
8	Telecommunications	Cost Accounting Records (Telecommunications) Rules,2002

(Updated up to 17^th February, 2012)