Applicability of Cost Records in Media Industry:-
- Till the year 2010-11, cost records were required to be maintained for companies in the manufacturing, mining, processing industry dealing with manufactured goods normally or with specific service Industry. But from the year 2011-12, there has been a noteworthy change for the compliance of Section 209(1)(d) of the Companies Act.
- With issue of notification with regard to The Companies (Cost Accounting Records) Rules, 2011(CARR-2011)
- Dated 3rd June 2011, the Ministry of Cost Records brought Media Industry also under statutory Cost Record Maintenance Regime.
Rule 2(l) of CARR 2011 specifies:-
- “Processing Activity” includes any act, process, procedure, function, operation, technique, treatment or method employed in relation to-
- “(xi) Telecasting, broadcasting, telecommunicating voice, text, picture, information, data or knowledge through any mode or medium; or
- (xiii) obtaining, compiling, recording, maintaining, transmitting, holding or using the information or data or knowledge; or
- (xiii) Executing instructions in memory to perform some transformation and/or computation on the data in the computer's memory.
- Applicability clause state that:
- If the company's turnover exceeds ₹ 20 Crore or,
- Net Worth exceeds ₹ 5 Crores or,
- Company is listed or proposed to be listed.
Non applicability of CARR 2011:-
As per Circular no. 67 dated: 30th Nov. 2011, CARR 2011 is not applicable to IT & IT enabled services and processing activities which is defined under Rule 2 of the CARR 2011 is also not applicable to those activities which are not commenced their production under financial year.
For the Statutory auditor:-
A. CARO requires the statutory auditor to comment on:-
- where maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act, whether such accounts and records have been made and maintained;
- All the statutory auditors of the media companies must take note of it and while reporting in CARO for the year 2011-12 must change the comment they were writing upto 2010-11.
- Now they are supposed to mention cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act.
- Also, the statutory auditors are required to mention whether such records have been made and maintained.
- The statutory auditor should review all the cost records and ensure that the same have been made and maintained. However, new Cost Accounting Records Rules 2011 have made the filing of the Cost Compliance Report with the Ministry compulsory. So the Statutory Auditor can review the Draft Compliance Report and few cost sheets and then give his comments in CARO.
B. Steps to be taken by Media Companies for compliance of Companies Cost Accounting Record rules 2011 for the year 2011-12:-
- Prepare Cost Records for all the programmes i.e, cost for telecasting the advertisement for the year 2011-12.
- Consolidate the cost records for the company as a whole.
- Prepare reconciliations of cost records with financial records
- Prepare the annexure to the Compliance report.
- Obtain Compliance Report as prescribed in Form B. The Report has to be duly signed by the Cost Accountant.
- Obtain the approval of the Board of Directors in respect of Annexure to the compliance report.
- Fill the details in Form A.
- File Form A along with attachments like Compliance Report and Annexure with the Ministry of Corporate Affairs before 30th September 2012 i.e, 180 days from the end of financial year.
C. Rule 4 of CARR 2011: - Maintenance of records-
(1) Every company to which these rules apply, including all units and branches thereof shall, in respect of each of its financial year commencing on or after the 1st day of April, 2011, keep cost records.
(2) The cost records referred to in sub-rule (1) shall be kept on regular basis in such manner so as to make it possible to calculate 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/quarterly/half-yearly/annual basis.
D. As regard applicability under these company you have to follow the three criteria’s of about net worth, turnover and listed companies and if the company falls under the services of Telecasting, broadcasting, telecommunicating voice, text, picture, information, data or knowledge through any mode or medium; or
Obtaining, compiling, recording, maintaining, transmitting, holding or using the information or data or knowledge; or
Executing instructions in memory to perform some transformation and/or computation on the data in the computer's memory.
If there is no transaction in the particular company than we will give the compliance report in Form B of that company. If we see the rule of CARR 2011 than we will come to the conclusion that CARR 2011 is applicable to all the company.
