WELCOME

ORDER OF EVENTS

General circular dated April 11, 2011

General circular no. 15/2011 dated April 11, 2011 Regarding appointment of Cost Auditor

Cost Audit Orders

1. Cost Audit Order F.No. 52/26/CAB-2010 dated May 02, 2011 for eight industries 2. Cost Audit Order F.NO. 52/26/CAB dated May 03, 2011 for six industries 3. Cost Audit Order F.No. 52/26/CAB-2010 dated June 30, 2011 for eight industries (modified of Order May 03, 2011) 4. Cost Audit Order F.NO. 52/26/CAB-2010 dated January 24, 2012 for Nine industries

1. Notifications dated June 03, 2011

The Companies (Cost Accounting Records) Rules 2011 (CARR) vide Notification No. GSR 429(E) List of Cost Accounting Records Rules superseded by GSR 429(E) The Companies (Cost Audit Report) Rules 2011 (CAR) vide Notification No. GSR 430(E)

2. Notifications dated December 07, 2011

G.S.R. 869 (E) - Cost Accounting Records (Telecom Industry) Rules, 2011 G.S.R. 870 (E) - Cost Accounting Records (Petroleum Industry) Rules, 2011 G.S.R. 871 (E) - Cost Accounting Records (Electricity Industry) Rules, 2011 G.S.R. 872 (E) - Cost Accounting Records (Sugar Industry) Rules, 2011 G.S.R. 873 (E) - Cost Accounting Records (Fertilizer Industry) Rules, 2011 G.S.R. 874 (E) - Cost Accounting Records (Pharma Industry) Rules, 2011

Circular dated November 11, 2011

Master Circular on 2/2011 dated November 11, 2011 on Cost Accounting Records and Cost Audit

Circular dated November 30, 2011

General Circular 67/2011 on Cost Accounting Records and Cost Audit clarifications coverage of certain sectors thereunder General Circular 68/2011 on Cost Accounting Records and Cost Audit clarifications applicability and compliance requirements

Circular No 01/ 2012-Customs dated 5th January 2012

Refund of 4% Additional Duty of Customs (4% CVD) in terms of Notification No.
102/2007-Customs dated 14.09.2001-regarding

Frequently Asked Questions

FAQ-1 FAQ-2 FAQ-3 FAQ-4 FAQ-5 Companies (Cost Accounting Records) Rules, 2011 as on 07th Dec. 2011 Companies (Cost Audit Report) Rules, 2011 as on 07th Dec. 2011 Cost Accounting Records Rules 2011 & Cost Audit Report Rules 2011 Cost Accounting Records Rules 2011 & Cost Audit Report Rules 2011- 07.12.11 Cost Accounting Records Rules 2011 & Cost Audit Report Rules 2011- 22.12.11

FAQ 4 Revised on 03.02.2012 FAQ 5 Revised on 03.02.2012

Cost accounting Standards

Cost accounting Standards (CAS1 to CAS 13)

Guidance Note on Cost Accounting Standards

Cost Accounting Standard 6 Material Cost (CAS-6) Cost Accounting Standard on Cost of Production for Captive Consumption (CAS-4)

Generally Accepted Cost Accounting Principles

GACAP - Generally Accepted Cost Accounting Principles

AUDIT QUALITY
Guidance Manual For Audit Quality

Exposure Drafts
Guidance Note on Classification of Product Group:

suggestions by 31st January 2012 XBRL Taxonomy for Cost Audit Report and Compliance Report: suggestions by 31st January 2012 Cost Accounting Standard - 14 on Pollution Control Cost (CAS - 14): suggestions by 15th February 2012

NAME CHANGE
Gazette dated January 13, 2012 No. 10 of 2012: about Institutes Name Change Gazette dated January 30, 2012 No. 167 of 2012: Institutes Name Change: 1st February 2012 appointed as effective date

Audit Planning Phases

Sl. 1. a)

Planning Phases Familiarization with the company: Nature of business and industry

Action to be taken

Comments

Acquire the previous years' Annual Reports and Accounts

b)

Objectives of the company, Keep notes. e.g., Maximization of Profits Market expansion, Market diversification Product diversification, etc. Ownership, e.g. public or private Major Shareholders Management Position of Shareholders Identify

c)

The specific business objectives shall also be checked and notes kept in respect thereof, as contained in the Memorandum of Association.

d)

Corporate structure, Subsidiaries Keep Notes and Affiliates Ownership percentage and Dates of acquisition

2. a)

Familiarization with Company records: Memorandum and Articles of Association, Foreign technical collaboration & agreement, Other agreement deeds or contracts Including that of inter - company transactions, Secretarial records and registers. Only material information need to be obtained/notes kept in respect of that contained in the secretariat records and registers, since these contain much detailed information relating to different statutory matters.

Obtain copies. Keep Notes

3.

Familiarization with the Organization of the Company

a)

Head of Finance/ Accounts/ Costing

b)

Other Directors & Key personnel

Discuss and Keep Notes

c)

Delegation of Financial and Administrative Authorities.

4.

Familiarity with organization profile:

a)

Main or Central or Head Office Administration Offices Other functional managements, e. g. Purchase, Sales, Production, Finance, etc. Background of Key personnel

Obtain detailed organization chart showing functional relationships.

5. a)

Familiarity with the company policies: Capitalization: Debt / Credit lines- shortterm Seasonal capital requirements Shortterm obligations Long-term obligations Keep Notes and Identify

b)

Products or Services Main Product lines By-product lines Production sites

Obtain a Chart. Keep notes.

c) d)

Inter-company transactions' policies Other important policies

Identify

Familiarization with Sales policy and 6. sales management . ___ ___________________________________ _____________ _______________________ Pricing Policies - Home and export sales. Export Policy - Exporting countries, Export/Import Control Order-effect, Keep Notes Product image - place in national economy, and Identify Own country sales policy, Distribution policy, Credit and collection policy.
7. a) Familiarization with Production planning and control Manufacturing process, factory layout, Product details. Production plans, scheduling etc. Plant capacities and other facilities. Obtain the process flowcharts, planning schedules, and charts for licensed and installed capacities.

8.

Familiarization with Accounting systems

a)

Financial accounting, Cost accounting, Integrated accounts Internal control set- up, Store accounting, Trial balance

Obtain the procedures manual, if any.

9.

Familiarization with Management information systems:

a)

Budgets

Obtain an outline of the schemes adopted, if any.

Standard costing 10. Familiarization with Internal audit system and Internal control Systems/ Internal Audit Programmes. Internal Audit Manual Obtain Internal Auditor's reports on areas covered

a)

11. Familiarization with Cost records, statements and reports:

a) Cost accounting records and other related records. b) Cost Statements and related Statements & documents c) Cost Accounting Manual Obtain them from the cost department.

d) Previous cost auditor's reports (if any)

Illustrative List of Cost

Records provided for Various Departments

1.Production
1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. Raw Material consumption register/report; Production report; Rejections/wastages/scrap report; Report on stoppage of machines with reasons; Idle time report with reasons; Machine utilization report; By-Product & Joint Products.

2.Work-in-progress and finished goods

2.1 Process stock register- cost centre-wise and product wise; 2.2 Finished goods stock register- product wise. 2.3 Daily Stock Accounts (DSA) maintained under Central Excise Law

3. Repairs

and maintenance

3.1 Works order register / card showing material and spares consumed and labor utilized; 3.2 Procedure followed for routine maintenance; 3.3 Details major breakdowns & Repairs; 3.4 Details of Abnormal Repairs & Reconditioning activities.

4. Utilities (steam, power, water)

4.1

4.2

Records of input and output; Record of cost centre-wise allocation of outputs.

5. Raw materials and stores

5.1 5.2 5.3 Goods received register; Bin cards; Materials/stores ledgers.

5. Employee Cost
6.1 6.2 6.3 Attendance registers/ sheets; Wages/salary sheets; Leave and gratuity payments.

7. Overheads
7.1 Details such as production hours, labour hours, machine hours to facilitate distribution of overheads; 7.2 Overheads Keys.

8. Cost Accounts
8.1 Overheads analysis register; 8.2 Cost centre-wise assets register; 8.3 Product ledger; 8.4 Annexure and proformae as per rules; 8.5 Reconciliation of profit/loss as per cost records and financial records.

9. Sales
9.1 Product-wise Sales analysis 9.2 Stock Transfer 9.3 Packing Cost 9.4 Marketing/ Market Research Cost

COST AUDIT REPORT FORMAT

Than