Cost Records

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bankim (Querist)
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06 September 2010 Under sec 211(3C) a company is required to maintain cost records.. What are the cost records required to be maintained with regard to material labour and direct expenses??

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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07 September 2010 Not sure whether you mentioned the section correctly.

Section 209(1)(d) speaks about cost accounting records. The section says that "such particulars relating to utilization of material or labor or to other items of cost as may be prescribed by Central Govt.

Central Govt publishes Cost Accounting Record Rules (CARR). Cost Accounting Record Rules specifies that books of utilisation of material or labour or to other items of cost as prescribed under the said Rules should be maintained. There are no specific guidelines. So, in general you should maintain (The below is taken from ICAI website):

1. Records for raw materials, components. stores & spare parts.
2. Records for labour.
3. Records for overheads.
4. Records for utilities / services.
5. Records for fixed assets.
6. Records for packing
7. Records for research mid development expenses.
8. Records for conversion cost.
9. Records for by-products.
10. Records for work-in-progress and finished goods.
11. Records for cost of production and marketing.
12. Reconciliation of cost records with financial books.
13. Computation of variances.
14. Physical verification.
15. Statistical data.

Check out the following links
http://www.aicmas.com/faqcostrecords.htm
http://www.mca.gov.in/Ministry/cab.html

The latest on this are Cost Audit Report Rules, 2001 and the Cost Audit Report (Amendment) Rules, 2006. I have written to MCA asking for latest copy of the rules and I get it I will send you the link.