17 October 2012
As per provisions of section 233B (2), the Board of Directors of a Company can appoint a cost auditor after obtaining prior approval of the Central Government. As per the revised procedure, the first point of reference will be the Audit Committee to ensure that the cost auditor is free from any disqualification as specified under section 233B (5) read with section 224 and sub-section (3) or sub-section (4) of section 226 of the Companies Act, 1956. The Audit Committee should also ensure that the cost auditor is independent and is at arm's length relationship with the company. After ascertaining the eligibility, the Audit Committee will recommend to the Board of Directors for appointment of the Cost Auditor Cost Auditor to provide a certificate under Section 224 (IB) of The Companies Act, 1956
Board Resolution to be passed by the Company for appointment of Cost Auditor.
Form 23-C to be filed by the Company, with Cost Audit Branch, Ministry of Corporate Affairs seeking approval for appointment of Cost Auditor.
Enclosure with Form 23-C a) Certified Copy of Board Resolution passed by the Company sanctioning the proposal for which the Central Government approval has been sought. b) Copy of Certificate obtained from cost auditor regarding compliance of Section 224 (1B).
After filing the online application by the Company, the same shall be deemed to be approved by the Central Government, unless contrary is heard within thirty (30) days from the date of filing such application. However, if within thirty (30) days from the date of filing such application, the Central Government directs the Company to re-submit the said application with such additional information or explanation, as may be specified in that direction, the period of thirty days for deemed approval of the Central Government will be counted from the date of re-submission of Form 23C by the Company. After obtaining approval of the Central Government (deemed or otherwise), the Company will be required to issue a formal letter of appointment to the cost auditor.
The Cost Auditor is required to inform the Central Government within thirty days of receipt of formal letter of appointment from the Company. Such intimation is required to be done in prescribed e-Form 23 D alongwith a copy of such appointment.
Provide all the details for Conduct of Cost Audit.
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