Frequently Asked Questions on Cost Accounting Records Rules
What are Cost Accounting Records ?
There is no exhaustive definition of cost records given under the law. However in order to understand the provisions surrounding the Cost Accounting Records Rules, CAMAP and AICMAS describe Cost Accounting Records and define them as:-
" The records contemplated under Section 209 (1) (d) of the Companies Act, 1956 would include all the accounting records maintained by the Company and made available for audit by the financial auditor. In addition, the following records would also be required to be maintained:
2. Work-in-progress and finished goods
2.1 Process stock register- cost centrewise and product wise;
2.2 Finished goods stock register- productwise.
3. Repairs and maintenance
3.1 Works order register / card showing material and spares consumed and labour utilized;
3.2 In case of workshop, additional records as described under 1 (1) above.
4. Utilities ( steam, power, water)
4.1 Records of input and output;
4.2 Record of cost centrewise allocation of outputs.
5. Raw materials and stores
5.1 Goods received register;
5.2 Bin cards;
5.3 Materials/stores ledgers.
6. Wages and salaries
6.1 Attendance registers/ sheets;
6.2 Wages/salary sheets;
6.3 Leave and gratuity payments.
Details such as production hours, labour hours, machine hours to facilitate distribution of production.
8. Cost Accounts
8.1 Overheads analysis register;
8.2 Cost centrewise assets register;
8.3 Product ledger;
8.4 Annexures and proformae as per rules;
8.5 Reconciliation of profit/loss as per cost records and financial records.
9. Sales: Sales analysis by products
It should be noted while preparing these records that necessary modifications wherever necessary may be made if nature of production process or industry demand. However such modification shall not be done to the extent that the essence and spirit of the rules are effected or get diluted.
Who are the users of these records?
Other than the Cost Auditor who shall require these records for conducting Cost Audit, following authorities place reliance for the confirmation of data in relation to cost of products:
Are Separate Cost Accounting Records envisaged ?
The answer is NO. The law as it stands envisages only the inclusion of certain particulars in the books of accounts ( Financial) and as such, maintenance of separate cost records is not contemplated. Since the rules are subordinate to the law the former can not insist on the maintenance of separate cost accounting records.
Place of keeping the Books of Accounts ?
The Act provides that the books of accounts shall be kept at the registered office of the company. However if the board of directors if so decide, they may be kept at any other place in India. In such a case company shall file with the registrar a notice in writing within seven days of the decision giving the full address of that other place.
Authentication of the Cost Accounting Records?
There is no specific provision in the rules about the authentication of the records. However in view of demands by the Central Excise authorities, Anti Dumping wing and the requirements under the MAOCARO, it is advisable that such records are authenticated by a Cost Accountant in full time practice on a quarterly basis and kept in the company.
Whether Cost Accounting Records are to be kept for each unit ?
The application of Cost Accounting Records Rules are on the products being manufactured by the company. Therefore every such unit which produces or manufactures the product under reference is covered under the rules and records are required for each of such units. This is further required under Report Rules, where separate certificate for each of the relevant units shall be needed to fulfill the requirements prescribed under the rules.
What is the time limit for preparation of the records ?
Time limit for completion of the records is not specified in the Records Rules. However a clue can be taken from the provisions contained in the Report Rules where 90 days from the close of the financial year was specified. This period has now been extended to 135 days.
Are Cost Accounting Standards to be followed while preparing Cost Accounting Records ?
Institute of Cost and Works Accountants of India has issued four cost accounting standards which specify that:
In view of above it is desirable that guidelines contained in the Cost Accounting standards are followed wherever applicable and a note be given in case of departure being made from the guidelines issued by CASB.
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