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COST AUDIT

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Why Should I Use Auriga Accounting For COST AUDIT ?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your COST AUDIT.

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Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for registration

Complete your registration

Your COST AUDIT

Why Should I Use Auriga Accounting For COST AUDIT ?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your COST AUDIT.

book appointment

Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for registration

Complete your registration

Your COST AUDIT

OVERVIEW

Cost audit refers to the examination, evaluation, and verification of a company’s cost accounting records, systems, and procedures to ensure compliance with the cost accounting standards and to determine the accuracy and reasonableness of the company’s cost statements and cost records. The objective of cost audit is to assess the efficiency and effectiveness of cost management and control within an organization.

The purpose of conducting a cost audit is to provide management with reliable information about the cost structure, cost behavior, and cost allocation within the company. It helps in identifying areas of cost inefficiencies, wastages, and deviations from standard costing practices. By analyzing the cost data, management can make informed decisions regarding cost reduction, cost control, pricing strategies, and resource allocation.

ELIGIBILITY

A. Cost Audit is a legal compulsion for:

  • Every company cited in item (A) of rule 3 whose yearly turnover during the immediately preceding FY is Rs 50 crores or more.

  • Every company cited in item (A) of rule 3 whose total turnover of individual products or services for which cost records are mandated to be administered under rule 3 is Rs 25 crore or more.

  • Every company cited in item (B) of rule 3 whose yearly turnover during the immediately preceding FY is Rs 100 crores or more.

  • Every company cited in item (B) of rule 3 whose total turnover of individual products or services for which cost records are mandated to be administered under rule 3 is Rs 35 crore or more.

B. Cost auditing is not a mandate for following companies falling under rule 3:

  • Whose revenue in foreign exchange from exporting activities surpass 75 % of its aggregate revenue; or
  • Which is functional in SEZ; or
  • Which is serving the power sector and generating electricity via Captive Generating Plant

Filing Of CRA 2 Form Cost Auditor

  • Every company under sub-rule (1) needs to file form CRA 2 for intimating authority about the auditor’s appointment within given timelines Within 30 days of the board meeting in which decision for the same was approved or;
  • Within 180 days of the commencement of the FY, whichever is earlier, via form CRA 2 along with the standard fee.
  • Every appointed cost auditor shall continue to discharge his duties till the expiry of 180 days from the closure of the FY or till he/she furnishes the cost audit report for the FY for which he/she has been appointed.
  • Provided that the cost auditor under these rules may be terminated from this office before the expiration of his term, via a board resolution post rendering a reasonable chance of being heard to the cost auditor & recording the reasons for such matter in writing;
  • Provided further that the CRA 2 form to be filed for sharing matters relating to the appointment of another cost auditor shall affix the concerned Board Resolution to the effect;

Form CRA 2, CRA 3 And CRA 4

  • Any casual vacancy for the cost auditor created due to resignation, death, or removal shall be filled by the BODs within 30 days of the occurrence of such vacancy & the company shall intimate the authority via CRA 2 form within 30 days of such appointment.
  • The cost statements, along with other relevant statements to be affixed with the cost audit report, shall be authenticated by the BODs before they are signed by board-authorized directors for submission to the cost auditor to report thereon
  • Every cost auditor who carries out a cost record audit shall furnish the cost audit report along with his observation, if any, in the form CRA Every cost auditor shall share his verified report to the BODs within 180 days from the closure of the FY to which the report relates & the BODs shall scrutinize such report, particularly ant reservation cited therein.
  • Within 30 days from the receipt’s date of a copy of the audit report, every company falling under said rules shall facilitate the authority with such report in form CRA 4 form in prescribed format and fees.

PENALTY

  • Failure to Appoint Cost Auditor: If a company is required to appoint a cost auditor under the provisions of the Companies Act 2013 and fails to do so, the company and every officer in default may be liable for a fine of up to Rs. 5,00,000 (Indian Rupees Five Lakhs).
  • Non-Compliance with Cost Audit Report: If a company fails to submit the cost audit report within the prescribed time to the Central Government or the appropriate authority, the company and every officer in default may be liable for a fine of up to Rs. 25,000 (Indian Rupees Twenty-Five Thousand) for every day of default.

benefit's

DOCUMENTS

  • Cost Accounting Records: The cost auditor will require access to the company’s cost accounting records, including cost ledgers, cost sheets, cost statements, cost allocation methods, and any other records related to cost accounting. These records provide the foundation for analyzing and verifying the company’s cost structure and cost management practices.
  • Financial Statements: The company’s financial statements, including the balance sheet, profit and loss statement, and cash flow statement, are often requested during a cost audit. These statements provide an overall picture of the company’s financial position and performance, which is important for assessing cost efficiency and profitability.
  • Cost Statements and Reports: The cost auditor may require various cost statements and reports prepared by the company, such as cost of production reports, cost variance analysis reports, cost of goods sold reports, and other cost-related reports. These documents help in evaluating cost trends, identifying cost drivers, and assessing cost control measures.
  • Supporting Documentation: The cost auditor may ask for supporting documents to verify the accuracy and validity of the cost data. This may include invoices, purchase orders, sales records, production records, inventory records, and any other relevant documentation that supports the cost transactions and allocations.
  • Cost Accounting Policies and Procedures: The company’s cost accounting policies and procedures, including cost allocation methods, cost control mechanisms, and cost accounting standards followed, are essential for the cost auditor to understand the company’s cost accounting framework and evaluate compliance.
  • Cost Budgets and Forecasts: If available, the cost auditor may request cost budgets and forecasts prepared by the company. These documents help in assessing the accuracy of cost estimates, budgeting processes, and cost control measures.
  • Other Relevant Records: Depending on the nature of the industry and the specific requirements of the cost audit, additional records and documents may be requested. These could include records related to cost allocation, overhead allocation, inventory valuation, pricing, or any other area relevant to the cost audit.

PROCESS

  • Appointment of Cost Auditor: The board of directors of the company appoints a qualified cost auditor or a firm of cost auditors. The appointment should comply with the eligibility criteria and requirements specified by the Companies Act 2013 and any other applicable regulations.
  • Preparation of Cost Audit Report: The cost auditor conducts the cost audit, reviews the company’s cost accounting records, verifies the cost data, and analyzes the cost management practices. Based on the audit findings, the cost auditor prepares the cost audit report.
  • Compliance with Cost Audit Rules: The cost auditor ensures compliance with the Cost Records and Cost Audit Rules prescribed by the government. These rules define the format, contents, and disclosures required in the cost audit report. The cost auditor should adhere to the prescribed guidelines and provide the necessary information and disclosures in the report.
  • Finalizing the Cost Audit Report: The cost auditor finalizes the cost audit report after incorporating all relevant information, findings, and recommendations. The report should accurately reflect the cost audit observations, compliance assessment, and any areas requiring management attention or improvement.
  • Signing and Certification: The cost audit report is signed and certified by the cost auditor or the authorized signatory of the firm of cost auditors. The signature and certification affirm the authenticity and accuracy of the report.
  • Submission to the Appropriate Authority: The cost audit report, along with the necessary attachments, is submitted to the appropriate authority within the specified timeline. The appropriate authority may vary depending on the industry and the specific requirements of the cost audit. In some cases, the report may need to be submitted to the Central Government or other regulatory bodies.
  • Compliance with Filing Requirements: The cost auditor should comply with the filing requirements prescribed by the government or regulatory authorities. This may involve submitting the cost audit report in the specified format, along with any supporting documents or disclosures required.
  • Retention of Records: The company should retain copies of the cost audit report, along with supporting documents, for the prescribed period as per the Companies Act 2013 or any other applicable regulations. These records should be maintained in a secure and accessible manner.

VALIDITY

WHY AURIGA?

  • Cost Audit Planning: They can assist in planning and organizing the cost audit process, including determining the scope, timeline, and resources required for conducting the audit.
  • Cost Data Analysis: They can analyze the company’s cost accounting records, cost statements, and other relevant data to assess cost efficiency, compliance, and identify areas for improvement.
  • Compliance Assistance: They can ensure compliance with the Cost Records and Cost Audit Rules prescribed by the government, including proper documentation, formatting, and disclosures required in the cost audit report.
  • Report Preparation: They can prepare the cost audit report in accordance with the prescribed guidelines, incorporating the audit findings, compliance assessment, and recommendations.
  • Filing Assistance: They can help companies in completing the necessary filing requirements, including submission of the cost audit report to the appropriate authority within the specified timeline.
  • Advisory Services: They can provide guidance and advice on cost management, cost control measures, and process improvements based on the findings of the cost audit.

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Our Happy Clients!

MD SAHIL
MD SAHIL
2023-06-10
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Prince Kushwaha
Prince Kushwaha
2023-06-10
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Prince Singh
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2023-06-10
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Priyanka Kumari
Priyanka Kumari
2023-04-07
They are best coordination with me. Time to time inform me how to work and what work is my pending. Time to time updated me about my company profile work like ROC Filling last date, GST filling last date, ITR etc... I have no paid any penalty since I started working with Auriga..
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Vishal Singh
2023-04-07
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Sameer khan
Sameer khan
2023-04-07
The auriga accounting private limited is a reliable and a customer support company the team has give Clear answer towards the customer by which the customer cannot get confused and get necessary detail to solve their queries and auriga provided me good service and delivered my work on time very well coordinate with me and talk very well I suggest if you have any work then call auriga they will definitely finish your work on time
Vivek Shakya
Vivek Shakya
2023-04-07
Great Services , within affordable rate and give full satisfaction on works. Easy to Cordinate, I have done My Previous year ITR , Startup Registration. I am very happy with their services and their first priority is their Customer.
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find way
2023-04-06
I'll give a five-star rating, I had doubts about how to start my work in the field of business and they guide me and instruct me on how to start a business. They have a great team.
623 Anjali
623 Anjali
2023-04-06
The Auriga has great services. Efficient communication and really easy way to get help and support.
Anjali Sharma
Anjali Sharma
2023-04-06
Auriga Accounting team represents the highest level of customer services I have experienced.The team gives accurate information and responses to queries very fast, which are customer is facing.

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