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What is a Cost Audit?

A cost audit is an independent check of a company’s cost records by a Cost Accountant in practice, under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014.

It applies only to companies in specified sectors that cross turnover limits. It is not required for every company.

Who Needs It?

Units operating fully in an SEZ and certain MSME-category companies are generally exempt. We confirm applicability product by product.

Cost Audit Forms

• CRA-1: format for maintaining cost records
• CRA-2: intimation of cost auditor appointment to the Central Government
• CRA-3: cost audit report prepared by the cost auditor for the Board
• CRA-4: filing of the cost audit report with MCA within 30 days of receiving it

Documents Required

• Financial statements and trial balance
• Product-wise production and sales data
• Raw material, labour and overhead records
• Stock and inventory records
• Cost sheets and cost accounting policies
• Previous cost audit reports and board resolutions

Cost Audit Process – Step by Step

1. Check whether cost records and cost audit apply.
2. Board appoints a Cost Accountant as cost auditor.
3. File CRA-2 for the appointment.
4. Maintain cost records in CRA-1 format.
5. Cost auditor verifies records and reconciles with financial accounts.
6. Cost audit report (CRA-3) goes to the Board.
7. File CRA-4 with MCA within 30 days.

Penalties

Failing to maintain cost records, appoint a cost auditor or file the cost audit report can attract penalties on the company and its officers under Section 148 of the Companies Act. Late CRA filings also attract additional fees.

Why eMitrawala?

• Experienced team for quick document checking and filing
• Support from application to certificate
• Renewal and compliance reminders
• Clear pricing with no hidden charges