Difference: Cost Compliance Report and Cost Audit Report

CMA Navneet Kr Jain , Last updated: 23 November 2012
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Difference in applicability of Cost Compliance Report and Cost Audit Report

New Cost Audit Orders and its Comparison with earlier orders

With issue of various circulars, cost audit orders and notifications with regard to Cost Accounting, the MCA has set the stage for collection of the authentic information (duly approved by Bard of Directors and verified by a Cost Accountant) with regard to various industries for use by various Ministries.

Till date there seems to be some confusion with regard to applicability, although through this forum a lot of efforts have been undertaken to create awareness among the accounting/secretarial fraternity.

Now, the companies fulfilling certain criteria are required to file either Cost Compliance Report or Cost Audit Report with Ministry of Corporate Affairs or both. This small article is a step towards bringing clarity on the various questions which we have received from various readers/stakeholders.

Before we provide the difference between the two, please note that presently there seven type of Cost Accounting record Rules which can be categorized into two categories:

a. Common

Companies Cost Accounting Records Rules 2011 w.e.f. year 2011-12

b. Industry Specific w.e.f 2012-13 in suppression of earlier relevant rules:

i. The Cost Accounting Records (Telecommunication Industry) Rules, 2011 vide Notification no G.S.R. 869(E)

ii. The Cost Accounting Records (Petroleum Industry) Rules, 2011 vide Notification no G.S.R. 870(E)

iii. The Cost Accounting Records (Electricity Industry) Rules, 2011 vide Notification no G.S.R. 871(E)

iv. The Cost Accounting Records (Sugar Industry) Rules, 2011 vide Notification no G.S.R. 872(E)

v. The Cost Accounting Records (Fertilizer Industry) Rules, 2011 vide Notification no G.S.R. 873(E)

vi. The Cost Accounting Records (Pharmaceutical Industry) Rules, 2011 vide Notification no G.S.R. 874(E)

Also there are Companies Cost Audit Report Rules 2011

		Cost Compliance Report (CCR)	Cost Audit Report(CAR)
1	Applicability	Companies carrying on manufacturing, mining, production or processing activities And Fulfilling any one of the following criteria are required to file Cost Compliance Report from the year 2011-12. If all the products are cost audit then only Cost Audit Report is required to be filed	Companies which are required to prepare Cost Records under section 209(1)(d) have to undergo Cost Audit provided cost audit order has been issued in respect of the product/industry to which the company belongs. Broadly, The companies under Industry Specific Rules have to undergo cost audit, if the Turnover is greater than 20 crores or net worth is more than Rs 5 Crores or the company is listed Similarly, the companies (other than belonging to the Industry Specific Cost Accounting Records Rules) pertaining various industries have been brought under Cost Audit if the turnover is more than 100 crores or company is listed. Please note that the turnover/networth criteria for the year preceding to the financials year is required to seen for applicability of Cost Audit
2	Section Applicable	209(1)(d) of the Companies Act	Section 233B of the Companies Act
3	Whether reported under CARO 2003	Yes	No
4	Whether reported in 23 AC/23ACA	Yes	Yes
5	Who can be appointed for signing the CCR	A cost accountant (fulfilling certain criteria) whether in service of the company or a Practising Cost Accountant	A practicing Cost Accountant/Firm of Cost Accountants
6	Time limit of appointment	No Statutory time limit has been prescribed for appointment of Cost Accountant for issue of Cost Compliance Report	Within 90 days of the commencement of the year
7	Any statutory form for appointment is required to be filed with MCA	No	Yes, Form 23C is required to be filed with MCA within 90 days of the commencement of the year under cost audit
8	Authority, which can appoint Cost Accountant	Any authorized person from Company’s Managment	Board of Directors
9	Whether report is to be approved by Board of Directors	Yes	Yes
10	When to file the report	Within 180 days of the close of the year	Within 180 days of the close of the year
11	Whether report is required to be filed in XBRL	Yes	Yes
12	Is there any specific list of the Industries covered	No, The industries covered under Cost Compliance Report have not been listed till date. However the companies falling under the applicability clause given above are required to file the CCR. However, reference can be made to the product group classification codes issued by MCA	Yes the list of Industries/products is available at MCA website http://mca.gov.in/Ministry/cao.html
13	Whether the reports have to be filed plantwise or companywise	Companywise report is required to be filed with MCA	Companywise report is required to be filed with MCA
14	Whether any penalties/prosecution is applicable for non-compliance with the provisions of various Cost Accounting Report Rules/ Cost Audit Report Rules	Yes	Yes
15	Who will be responsible	All officers-in-default including concerned directors as per Companies Actwill be held responsible	All officers-in-default including concerned directors as per Companies Actwill be held responsible