Cost Records and Audit Rules G.S.R. 425(E)

The Companies (Cost Records and Audit) Rules, 2014

The regulated and non-regulated sectors required to keep cost records, the turnover thresholds that trigger cost audit, maintenance of records in CRA-1, appointment of the cost auditor in CRA-2 and the cost audit report in CRA-3 and CRA-4.

7 Rules

G.S.R. 425(E) Notification

CRA-1 Record form

14 Aug 2026 Text as on

G.S.R. 425(E) Enacted 30 June 2014 Enforced 01 April 2014 Ministry of Corporate Affairs As amended upto 14 August 2026

Made under

The Companies Act, 2013 Chapter X

s. 148 s. 469

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Opening text

Preamble

NOTIFICATION

New Delhi, the 30th June, 2014

G.S.R. 425 (E). - In exercise of the powers conferred by sub-sections (1) and (2) of section 469 and section 148 of the Companies Act, 2013 (18 of 2013) and in supersession of Companies (Cost Accounting Records) Rules, 2011; Companies (Cost Audit Report) Rules, 2011; Cost Accounting Records (Telecommunication Industry) Rules, 2011; Cost Accounting Records (Petroleum Industry) Rules, 2011; Cost Accounting Records (Electricity Industry) Rules, 2011; Cost Accounting Records (Sugar Industry) Rules, 2011; Cost Accounting Records (Fertilizer Industry) Rules,2011 and Cost Accounting Records (Pharmaceutical Industry) Rules, 2011, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely:-

Chapter I

Application

4 rules

R. 1 Short title and commencement

Open rule

1. Short title and commencement.- (1) These rules may be called the Companies (cost records and audit) Rules, 2014.

(2) They shall come into force on the date of publication in the Official Gazette.

R. 2 Definitions

Open rule

2. Definitions: In these rules, unless the context otherwise requires -

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(aa)"Customs Tariff Act Heading" means the heading as referred to in the Additional Notes in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)

(b) “Cost Accountant in practice” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959), who holds a valid certificate of practice under sub-section (1) of section 6 of that Act and who is deemed to be in practice under sub-section (2) of section 2 thereof, and includes a firm or limited liability partnership of cost accountants;

(d) "cost audit report" means the duly signed cost auditor's report on the cost records examined and cost statements which are prepared as per these rules, including attachment, annexure, qualifications or observations attached with or included in such report;"

(e) “cost records” means books of account relating to utilisation of materials, labour and other items of cost as applicable to the production of goods or provision of services as provided in section 148 of the Act and these rules;

(f) “form” means a form annexed to these rules;

(fa) Indian Accounting Standards means Indian Accounting Standards as referred to in Companies (Indian Accounting Standards) Rules, 2015.

(g) “institute” means the Institute of Cost Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);

(h) all other words and expressions used in these rules but not defined, and defined in the Act or in the Companies (Specification of Definition Details) Rules, 2014 shall have the same meanings as assigned to them in the Act or in the said rules.

2. Definitions: In these rules, unless the context otherwise requires -

(a) “Act” means the Companies Act, 2013 (18 of 2013);

(aa)"Customs Tariff Act Heading" means the heading as referred to in the Additional Notes in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)

(b) “Cost Accountant in practice” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959), who holds a valid certificate of practice under sub-section (1) of section 6 of that Act and who is deemed to be in practice under sub-section (2) of section 2 thereof, and includes a firm or limited liability partnership of cost accountants;

(d) "cost audit report" means the duly signed cost auditor's report on the cost records examined and cost statements which are prepared as per these rules, including attachment, annexure, qualifications or observations attached with or included in such report;"

(e) “cost records” means books of account relating to utilisation of materials, labour and other items of cost as applicable to the production of goods or provision of services as provided in section 148 of the Act and these rules;

(f) “form” means a form annexed to these rules;

(fa) Indian Accounting Standards means Indian Accounting Standards as referred to in Companies (Indian Accounting Standards) Rules, 2015.

(g) “institute” means the Institute of Cost Accountants of India constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);

(h) all other words and expressions used in these rules but not defined, and defined in the Act or in the Companies (Specification of Definition Details) Rules, 2014 shall have the same meanings as assigned to them in the Act or in the said rules.

R. 3 Application of cost records

Open rule

3. Application of Cost Records.- For the purposes of sub-section (1) of section 148 of the Act, the class of companies, including foreign companies defined in clause (42) of section 2 of the Act, engaged in the production of the goods or providing services, specified in the Table below, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account, namely:-

(A) Regulated Sectors

SL. No.Industry/ Sector/ Product/ ServiceCustoms Tariff Act Heading Central Excise Tariff Act Heading (substituted vide Companies (cost records and audit) Second Amendment Rules, 2017 effective from 01.07.2017)

(wherever applicable)

1Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 7997 (24 of 1997); including activities that requires authorization or license issued by the Department of Telecommunications, Government of India under Indian Telegraph Act, 1885 (13 of 1885);Not applicable

2Generation, transmission, distribution and supply of electricity

regulated by the relevant regulatory body or authority under the

Electricity Act, 2003 (36 of 2003);Generation-27t6; Other Activity-Not Applicable

3Petroleum products; including activities regulated by the

Petroleum and Natural Gas Regulatory Board under the

Petroleum and Natural Gas Regulatory Board Act,2006 (19 of

2006);2709 to 27L5; Other Activity-Not Applicable

4Drugs and pharmaceuticals;2901 to 2942; 3001to 3006.

5Fertilizers;3102 to 3105

6Sugar and industrial alcohol;1701; 1703; 2207.

(B) Non-regulated Sectors

SL. No.Industry/ sector/ Product/ ServiceCustoms Tariff Act Heading Central Excise Tariff Act Heading (substituted vide Companies (cost records and audit) Second Amendment Rules, 2017 effective from 01.07.2017)

(wherever applicable)

1Machinery and mechanical appliances used in defense, space and atomic energy sectors excluding any ancillary item or items;

Explanation. - For the purposes of this sub-clause, any

company which is engaged in any item or items

supplied exclusively for use under this clause, shall be

deemed to be covered under these rules8401; 8801 to 8805;8901 to 8908.

2Turbo jets and turbo propellers;8411

3Arms, ammunitions and Explosives3601 to 3603; 9301 to 9306

4Propellant powders; prepared explosives (other than

propellant powders); safety fuses; detonating fuses;

percussion or detonating caps; igniters; electric

detonators;3601 to 3603

5Radar apparatus, radio navigational aid apparatus

and radio remote control apparatus;8526

6Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent or more by the Government or Government agencies;8710

7Port services of stevedoring, pilotage, hauling, mooring, re-mooring, hooking, measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports services rendered for a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under the Major Port trusts Act, 1963 (38 of 1963); (substituted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018)Not applicable

8Aeronautical services of air traffic management, aircraft operations, ground safety services, ground handling, cargo facilities and supplying fuel rendered by airports and regulated by the Airports at the Airports ; (substituted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018) Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act,2008 (27 of 2008);Not applicable

9lron and Steel;7201 to 7229; 73O7 to 7326

10Roads and other infrastructure projects corresponding to para No. (1) (a) as specified in Schedule Vl of the Companies Act, 2013 (18 of 2013);Not applicable.

11Rubber and allied products; including products

regulated by the Rubber Board constituted under the

Rubber Act, 1.947 (XX|V of 1947);4001 to 4017

12Coffee and tea;0901 to 0902

13Railway or tramway locomotives, rolling stock,

railway or tramway fixtures and fittings, mechanical

(including electro mechanical) traffic signalling

equipment's of all kind;8601 to 8608, 8609 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018)

14Cement;2523; 6811 to 5812

15Ores and Mineral products;2502 to 2522; 2524 to 2526;

2528 to 2530; 2601. to 2617

16Mineral fuels (other than petroleum), mineral oils etc;2707 to 2708

17Base metals;7401 to 7403 ;7405 to 7473;

7419;7507 to 7508; 7601 to

7674; 7801 to 7802; 1804;

7806; 7901, to 7905; 7907;

8001; 8003; 8007; 8101 to

8113

18Inorganic chemicals, organic or inorganic compounds

of precious metals, rare-earth metals of radioactive

elements or isotopes, and organic chemicals;2801 to 2853; 2901. to 2942;

3801 to 3807; 3402 to 3403;

3809 to 3824.

19Jute and Jute Products;5303, 5307 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018), 5310

20Edible Oil;1507 to 1518

21Construction Industry as per para No. (5) (a) as

specified in Schedule Vt of the Companies Act, 2013

(18 of 2013);Not applicable.

22Health services, namely functioning as or running

hospitals, diagnostic centres, clinical centres or test

laboratories;Not applicable.

23Education services, other than such similar services

falling under philanthropy or as part of social spend

which do not form part of any business;Not applicable.

24Milk powder;0402

25Insecticides;3808

26Plastics and polymers;3901 to 3914; 3916 to 3921;

3925

27Tyres and tubes;4011 to 4013

28Paper; Pulp and Paper (substituted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018)4701 to 4704 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018), 4801 to 4802

29Textiles;5004 to 5007; 5106 to 5113;

52OS to 521,2; 5303;5307 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018) 5310;

5401 to 5408;5501 to 5516

30Glass;7003 to 7008j 7017;7076

31Other machinery and Mechanical Appliances;8402 to 8487

32Electricals or electronic machinery;8501 to 8507:8511 to 8512:

8514 to 8515; 8517; 8525 to

8536: 8538 to 8547.

33Production, import and supply or trading of following

medical devices, namely:-

(i) Cardiac stents;

(ii) Drug eluting stents;

(iii) Catheters;

(iv) Intra ocular lenses;

(v) Bone cements;

(vi) Heart valves;

(vii) Orthopaedic implants;

(viii) Internal prosthetic replacements;

(ix) Scalp vein set;

(x) Deep brain stimulator;

(xi) Ventricular peripheral shud;

(xii) Spinal implants;

(xiii) Automatic impalpable cardiac deflobillator defibrillators (substituted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018) ;

(xiv) Pacemaker (temporary and permanent);

(xv) Patent ductus arteriosus, atrial septal defect and

ventricular septal defect closure device;

(xvi) Cardiac re-synchronise therapy ;

(xvii) Urethra spinicture devices;

(xviii) Sling male or female;

(xix) Prostate occlusion device; and

(xx) Urethral stents:9018 to 9022

Provide that nothing contained in serial number 33 shall apply to foreign companies having only liaison offices

Provided further that nothing contained in this rule shall apply to a company which is classified as a micro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Development Act,2006 (27 of 2006)

(A) Regulated Sectors

(wherever applicable)

2Generation, transmission, distribution and supply of electricity

regulated by the relevant regulatory body or authority under the

Electricity Act, 2003 (36 of 2003);Generation-27t6; Other Activity-Not Applicable

3Petroleum products; including activities regulated by the

Petroleum and Natural Gas Regulatory Board under the

Petroleum and Natural Gas Regulatory Board Act,2006 (19 of

2006);2709 to 27L5; Other Activity-Not Applicable

4Drugs and pharmaceuticals;2901 to 2942; 3001to 3006.

5Fertilizers;3102 to 3105

6Sugar and industrial alcohol;1701; 1703; 2207.

(B) Non-regulated Sectors

(wherever applicable)

1Machinery and mechanical appliances used in defense, space and atomic energy sectors excluding any ancillary item or items;

Explanation. - For the purposes of this sub-clause, any

company which is engaged in any item or items

supplied exclusively for use under this clause, shall be

deemed to be covered under these rules8401; 8801 to 8805;8901 to 8908.

2Turbo jets and turbo propellers;8411

3Arms, ammunitions and Explosives3601 to 3603; 9301 to 9306

4Propellant powders; prepared explosives (other than

propellant powders); safety fuses; detonating fuses;

percussion or detonating caps; igniters; electric

detonators;3601 to 3603

5Radar apparatus, radio navigational aid apparatus

and radio remote control apparatus;8526

9lron and Steel;7201 to 7229; 73O7 to 7326

10Roads and other infrastructure projects corresponding to para No. (1) (a) as specified in Schedule Vl of the Companies Act, 2013 (18 of 2013);Not applicable.

11Rubber and allied products; including products

regulated by the Rubber Board constituted under the

Rubber Act, 1.947 (XX|V of 1947);4001 to 4017

12Coffee and tea;0901 to 0902

13Railway or tramway locomotives, rolling stock,

railway or tramway fixtures and fittings, mechanical

(including electro mechanical) traffic signalling

equipment's of all kind;8601 to 8608, 8609 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018)

14Cement;2523; 6811 to 5812

15Ores and Mineral products;2502 to 2522; 2524 to 2526;

2528 to 2530; 2601. to 2617

16Mineral fuels (other than petroleum), mineral oils etc;2707 to 2708

17Base metals;7401 to 7403 ;7405 to 7473;

7419;7507 to 7508; 7601 to

7674; 7801 to 7802; 1804;

7806; 7901, to 7905; 7907;

8001; 8003; 8007; 8101 to

8113

18Inorganic chemicals, organic or inorganic compounds

of precious metals, rare-earth metals of radioactive

elements or isotopes, and organic chemicals;2801 to 2853; 2901. to 2942;

3801 to 3807; 3402 to 3403;

3809 to 3824.

19Jute and Jute Products;5303, 5307 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018), 5310

20Edible Oil;1507 to 1518

21Construction Industry as per para No. (5) (a) as

specified in Schedule Vt of the Companies Act, 2013

(18 of 2013);Not applicable.

22Health services, namely functioning as or running

hospitals, diagnostic centres, clinical centres or test

laboratories;Not applicable.

23Education services, other than such similar services

falling under philanthropy or as part of social spend

which do not form part of any business;Not applicable.

24Milk powder;0402

25Insecticides;3808

26Plastics and polymers;3901 to 3914; 3916 to 3921;

3925

27Tyres and tubes;4011 to 4013

29Textiles;5004 to 5007; 5106 to 5113;

52OS to 521,2; 5303;5307 (inserted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018) 5310;

5401 to 5408;5501 to 5516

30Glass;7003 to 7008j 7017;7076

31Other machinery and Mechanical Appliances;8402 to 8487

32Electricals or electronic machinery;8501 to 8507:8511 to 8512:

8514 to 8515; 8517; 8525 to

8536: 8538 to 8547.

33Production, import and supply or trading of following

medical devices, namely:-

(i) Cardiac stents;

(ii) Drug eluting stents;

(iii) Catheters;

(iv) Intra ocular lenses;

(v) Bone cements;

(vi) Heart valves;

(vii) Orthopaedic implants;

(viii) Internal prosthetic replacements;

(ix) Scalp vein set;

(x) Deep brain stimulator;

(xi) Ventricular peripheral shud;

(xii) Spinal implants;

(xiii) Automatic impalpable cardiac deflobillator defibrillators (substituted vide Companies (Cost Records and Audit) Amendment Rules, 2018 dated 03.12.2018) ;

(xiv) Pacemaker (temporary and permanent);

(xv) Patent ductus arteriosus, atrial septal defect and

ventricular septal defect closure device;

(xvi) Cardiac re-synchronise therapy ;

(xvii) Urethra spinicture devices;

(xviii) Sling male or female;

(xix) Prostate occlusion device; and

(xx) Urethral stents:9018 to 9022

Provide that nothing contained in serial number 33 shall apply to foreign companies having only liaison offices

R. 4 Applicability for cost audit

Open rule

4. Applicability for cost audit.- (1) Every company specified in the item (A) of rule 3 shall be required to get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees fifty crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees twenty five crore or more

(2) Every company specified in item (B) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees one hundred crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees thirty five crore or more.

(3) The requirement for cost audit under these rules shall not apply to a company which is covered in rule 3, and-

(i) Whose revenue from exports, in foreign exchange, exceeds seventy five percent of its total revenue; or

(ii) which is operating from a special economic zone.

(iii) which is engaged in generation of electricity for captive consumption through Captive Generating PIant. For this purpose, the term "Captive Generating Plant" shall have the same meaning as assigned in rule 3 of the Electricity Rules, 2005″;

4. Applicability for cost audit.-  (1) Every company specified in the item (A) of rule 3 shall be required to get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees fifty crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees twenty five crore or more

(3) The requirement for cost audit under these rules shall not apply to a company which is covered in rule 3, and-

(i) Whose revenue from exports, in foreign exchange, exceeds seventy five percent of its total revenue; or

(ii) which is operating from a special economic zone.

(iii) which is engaged in generation of electricity for captive consumption through Captive Generating PIant. For this purpose, the term "Captive Generating Plant" shall have the same meaning as assigned in rule 3 of the Electricity Rules, 2005″;

Chapter II

Records, Audit and Exemptions

3 rules

R. 5 Maintenance of records

Open rule

5. Maintenance of records.- (1) Every company under these rules including all units and branches thereof, shall, in respect of each of its financial year commencing on or after the 1st day of April, 2014, maintain cost records in form CRA-1.

Provided that in case of company covered in serial number 12 and serial numbers 24 to 32 of item (B) of rule 3, the requirement under this rule shall apply in respect of each of its financial year commencing on or after 1st Day of April,2015

(2) The cost records referred to in sub-rule (1) shall be maintained on regular basis in such manner as to facilitate calculation of per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly or quarterly or half-yearly or annual basis.

(3) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs to achieve optimum economies in utilisation of resources and these records shall also provide necessary data which is required to be furnished under these rules.

5. Maintenance of records.- (1) Every company under these rules including all units and branches thereof, shall, in respect of each of its financial year commencing on or after the 1st day of April, 2014, maintain cost records in form CRA-1.

Provided that in case of company covered in serial number 12 and serial numbers 24 to 32 of item (B) of rule 3, the requirement under this rule shall apply in respect of each of its financial year commencing on or after 1st Day of April,2015

(2) The cost records referred to in sub-rule (1) shall be maintained on regular basis in such manner as to facilitate calculation of per unit cost of production or cost of operations, cost of sales and margin for each of its products and activities for every financial year on monthly or quarterly or half-yearly or annual basis.

(3) The cost records shall be maintained in such manner so as to enable the company to exercise, as far as possible, control over the various operations and costs to achieve optimum economies in utilisation of resources and these records shall also provide necessary data which is required to be furnished under these rules.

R. 6 Cost audit

Open rule

6. Cost audit.- (1) The category of companies specified in rule 3 and the thresholds limits laid down in rule 4, shall within one hundred and eighty days of the commencement of every financial year, appoint a cost auditor.

Provided that before such appointment is made, the written consent of the cost auditor to such appointment, and a certificate from him or it, as provided in sub-rule (1.A), shall be obtained.

(1A) The cost auditor appointed under sub-rule (1) shall submit a certificate that-

(a) the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Cost and Works Accountants Act, 1959 (23 of 1959) and the rules or regulations made thereunder;

(b) the individual or the firm, as the case may be, satisfies the criteria provided in section 141 of the Act, so far as may be applicable;

(d) the list of proceedings against the cost auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.

(2) Every company referred to in sub-rule (1) shall inform the cost auditor concerned of his or its appointment as such and file a notice of such appointment with the Central Government within a period of thirty days of the Board meeting in which such appointment is made or within a period of one hundred and eighty days of the commencement of the financial year, whichever is earlier, through electronic mode, in form CRA-2, along with the fee as specified in Companies (Registration Offices and Fees) Rules, 2014.

(3) Every cost auditor appointed as such shall continue in such capacity till the expiry of one hundred and eighty days from the closure of the financial year or till he submits the cost audit report, for the financial year for which he has been appointed.

Provided that the cost auditor appointed under these rules may be removed from his office before the expiry of his term, through a board resolution after giving a reasonable opportunity of being heard to the Cost Auditor and recording the reasons for such removal in writing;

Provided further that the form CRA-2 to be filed with the Central Government for intimating appointment of another cost auditor shall enclose the relevant Board Resolution to the effect:

ProvidedProvided also that nothing contained in this sub-rule shall prejudice the right of the cost auditor to resign from such office of the company

(3A) Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the Board of Directors within thirty days of occurrence of such vacancy and the company shall inform the Central Government in form CRA-2 within thirty days of such appointment of cost auditor

(3B) The cost statements, including other statements to be annexed to the cost audit report, shall be approved by the Board of Directors before they are signed on behalf of the Board by any of the director authorised by the Board, for submission to the cost auditor to report thereon

(4) Every cost auditor, who conducts an audit of the cost records of a company, shall submit the cost audit report along with his or its reservations or qualifications or observations or suggestions, if any, in form CRA-3.

(5) Every cost auditor shall forward his duly signed report to the Board of Directors of the company within a period of one hundred and eighty days from the closure of the financial year to which the report relates and the Board of Directors shall consider and examine such report, particularly any reservation or qualification contained therein.";

(6) Every company covered under these rules shall, within a period of thirty days from the date of receipt of a copy of the cost audit report, furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein, in form CRA-4 in Extensible Business Reporting Language format in the manner as specified in the Companies (Filing of Documents and Forms in Extensible Business Reporting language) Rules, 2015 along with fees specified in the Companies (Registration Offices and Fees) Rules, 2014."

Provided that the Companies which have got extension of time of holding Annual General Meeting under section 96 (1) of the Companies Act, 2013, may file form CRA-4within resultant extended period of filing financial statements under section 137 of the Companies Act, 2013.

(7) The provisions of sub-section (12) of section 143 of the Act and the relevant rules made thereunder shall apply mutatis mutandis to a cost auditor during performance of his functions under section 148 of the Act and these rules.

6. Cost audit.- (1) The category of companies specified in rule 3 and the thresholds limits laid down in rule 4, shall within one hundred and eighty days of the commencement of every financial year, appoint a cost auditor.

Provided  that before such appointment is made, the written consent of the cost auditor to such appointment, and a certificate from him or it,  as provided in sub-rule (1.A), shall be obtained.

(1A) The cost auditor appointed under sub-rule (1) shall submit a certificate that-

(a) the individual or the firm, as the case may be, is eligible for appointment and is not disqualified for appointment under the Act, the Cost and Works Accountants Act, 1959 (23 of 1959) and the rules or regulations made thereunder;

(b) the individual or the firm, as the case may be, satisfies the criteria provided in section 141 of the Act, so far as may be applicable;

(d) the list of proceedings against the cost auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct.

(2) Every company referred to in sub-rule (1) shall inform the cost auditor concerned of his or its appointment as such and file a notice of such appointment with the Central Government within a period of thirty days of the Board meeting in which such appointment is made or within a period of one hundred and eighty days of the commencement of the financial year, whichever is earlier, through electronic mode, in form CRA-2, along with the fee as specified in Companies (Registration Offices and Fees) Rules, 2014.

(3) Every cost auditor appointed as such shall continue in such capacity till the expiry of one hundred and eighty days from the closure of the financial year or till he submits the cost audit report, for the financial year for which he has been appointed.

Provided that the cost auditor appointed under these rules may be removed from his office before the expiry of his term, through a board resolution after giving a reasonable opportunity of being heard to the Cost Auditor and recording the reasons for such removal in writing;

Provided further that the form CRA-2 to be filed with the Central Government for intimating appointment of another cost auditor shall enclose the relevant Board Resolution to the effect:

ProvidedProvided also that nothing contained in this sub-rule shall prejudice the right of the cost auditor to resign from such office of the company

(3A)  Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the Board of Directors within thirty days of occurrence of such vacancy and the company shall inform the Central Government in form CRA-2 within thirty days of such appointment of cost auditor

(3B) The cost statements, including other statements to be annexed to the cost audit report, shall be approved by the Board of Directors before they are signed on behalf of the Board by any of the director authorised by the Board, for submission to the cost auditor to report thereon

(4) Every cost auditor, who conducts an audit of the cost records of a company, shall submit the cost audit report along with his or its reservations or qualifications or observations or suggestions, if any, in form CRA-3.

(5) Every cost auditor shall forward his duly signed report to the Board of Directors of the company within a period of one hundred and eighty days from the closure of the financial year to which the report relates and the Board of Directors shall consider and examine such report, particularly any reservation or qualification contained therein.";

(6) Every company covered under these rules shall, within a period of thirty days from the date of receipt of a copy of the cost audit report, furnish the Central Government with such report along with full information and explanation on every reservation or qualification contained therein, in form CRA-4 in Extensible Business Reporting Language format in the manner as specified in the Companies (Filing of Documents and Forms in Extensible Business Reporting language) Rules, 2015 along with fees specified in the Companies (Registration Offices and Fees) Rules, 2014."

(7) The provisions of sub-section (12) of section 143 of the Act and the relevant rules made thereunder shall apply mutatis mutandis to a cost auditor during performance of his functions under section 148 of the Act and these rules.

R. 7 Rules not to apply in certain cases

Open rule

The Companies (Cost Records and Audit) Rules, 2014

Preamble

Application

Records, Audit and Exemptions

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