TMI BlogThe Cost Audit ReportX X X X Extracts X X X X X X X X Extracts X X X X ..... ( ii ) proper cost accounting records, as prescribed under clause ( d ) of sub-section (1) of section 209 of the Companies Act, 1956, have/have not been kept by the company; ( iii ) proper returns adequate for the purpose of my/our Cost Audit have/have not been received from the branches not visited by me/us; ( iv ) the said books and records give/do not give the information required by the Companies Act, 1956 in the manner so required; ( v ) the cost statements in respect of product or activity under reference as specified in the Annexures/Proforma of Schedule I, Schedule II or Schedule III of the concerned Cost Accounting Records (** .........) Rules duly audited by me/us are kept in the company. 2. In my/our opinion, the company's cost accounting records have/have not been properly kept so as to give a true and fair view of the cost of production, cost of sales and margin of the product under reference as prescribed under the rules. 3. Based on my/our examination of the records of the company subject to the aforesaid qualifications, if any, I/We give my/our observations and suggestions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words not applicable. (2) ** Specify the title of the concerned Cost Accounting Records Rules made under clause ( d ) of sub-section (1) of section 209 of the Companies Act, 1956 which are applicable to the product or activity of the company. (3) If as a result of the examination of the books of account, the Cost Auditor desires to point out any material deficiency or give a qualified report, he shall indicate the same against the relevant paras ( i ) to ( vi ) only in the prescribed form of the Cost Audit Report giving details of discrepancies he has come across. (4) The report, suggestions, observations and conclusions given by the Cost Auditor under this paragraph shall be based on verified data, reference to which shall be made here and shall, wherever practicable, be included after the company has been afforded an opportunity to comment on them. Annexure to the Cost Audit Report [ See rule 2( c ) and rule 4] 1. General (1) ( a ) Name and address of the registered office of the company whose accounts are audited. ( b ) Name and address of the place where the cost accounting records are maintained viz . registered office, head office or factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of the order. (16) A printed copy of the Annual Report, containing audited Profit and Loss Account, Balance Sheet and Auditor's Report in respect of the company's financial year for which the report is rendered, shall be enclosed with the Cost Audit Report. 2. Cost accounting system (1) Briefly describe the cost accounting system existing in the company, keeping in view the requirements of the Cost Accounting Records Rules applicable to the class of companies manufacturing the product under reference and also its adequacy or otherwise to determine correctly the cost of production, cost of sales, sales realisation and margin of the product under reference. (2) Briefly specify the changes, if any, made in the costing system; basis of inventory valuation; method of overhead allocation; apportionment to cost centres/ departments and final absorption to the product under reference, etc., during the current financial year as compared to the previous financial year. 3. Process of manufacture A brief note regarding the process of manufacture along with flow chart covering production, utility and service department of the product. 4. Quantitative deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( c ) 2. Self manufactured: ( a ) (specify) ( b ) ( c ) 3. Imported: ( a ) (specify) ( b ) ( c ) 4. Total Note . Details should be furnished in respect of major input materials each constituting at least 2% of the total raw material cost. 5 (B). Standard/Actual consumption of input materials per unit Particulars Unit Standard Actuals Current Year 1st Previous Year 2nd Previous Year 1. (specify) 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Particulars Unit Standard Actuals Current Year 1st Previous Year 2nd Previous Year 1. (specify) 2. 3. Note . Details should be furnished in respect of each major type/variety/size, etc. of product under reference. 8. Salaries and wages Particulars Current Year 1st Previous Year 2nd Previous Year A. Quantitative Details: 1. Direct Workers: ( a ) Average number during the year ( b ) Man-days available ( c ) Man-days actually worked for: ( i ) own production ( ii ) job work ( d ) Reason-wise analysis of idle man-days [( a ) - ( b )] ( i ) absenteeism ( ii ) shortage of raw materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Whether fixed assets register maintained cost centre-wise 2. Method of providing depreciation 3. Amount of depreciation under section 205(2) of the Companies Act, 1956 or any other relevant Act, as the case may be 4. Amount of depreciation provided in the financial records 5. Amount of depreciation absorbed in the cost records* 6. Shortfall/Excess, if any (3 and 5) Note . * The impact of re-valuation of assets, if any, shall not be included. 11. Gross Block, Depreciation and Lease Rent Particulars Gross Black Depreciation Lease Rent paid if any Total ( b + c ) 1st Previous Year 2nd Previous Year a b c d Name of major cost centres/products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Royalty and technical know-how charges Particulars Current Year 1st Previous Year 2nd Previous Year 1. Royalty on production/Sales 2. Lump sum payment of royalty, if any 3. Technical know-how charges 4. Others, if any 5. Total amount 6. Amount capitalised/deferred during the year 7. Net amount (5 - 6) 8. Deferred amount of earlier years, if any 9. Amount provided in the financial accounts (7 + 8) 10. Amount absorbed in the cost records 11. Shortfall/Excess, if any 12. Amount paid to related parties Note . The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d2. Closing stock d3. Value of non-moving stock d4. Percentage of d3 to d2 e1. Total: e2. Closing stock e3. Value of non-moving stock e4. Percentage of e3 to e2 18. (B) Written off stock (during the year) Particulars Current Year 1st Previous Year 2nd Previous Year 1.Direct Materials (Raw Material and Components, etc) 2. Indirect Materials 3. WIP 4. Finished Goods 5. Total 19. (A) Inventory valuation (at the end of the year) Particulars Basis of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Give in brief the method of inventory valuation system indicating the elements of cost included therein and the extent thereof. (4) Capital work-in-progress to be shown separately. 19. (B) Physical verification of inventory Sl. No. Particulars Periodicity of verification Shortage Value (Rs.) Excess Value (Rs.) Net (Rs.) 1. Raw material 2 Chemicals, additives, consumables, etc. 3. Stores and Spares 4. Packing Materials 5. Tools and Implements 6. WIP 7. Finished Goods 8. Scrap, Wastage 9. Total 20. Sales of the product under reference Particulars Current year Two Previous Years Qty Rate Amount Qty Rate Amount 1. Purchased goods: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... varieties. (2) Separate details shall be furnished for margin on indigenous sales and export sales. Where the product (such as sugar, bulk drugs, formulations, etc.) is sold at different prices in accordance with government policy, sales realisation and margin on such product at different prices shall be shown separately alongwith quantity and value. 22. Competitive margin against imports Particulars Current Year 1st Previous Year 2nd Previous Year 1. Name of product 2. Estimated demand of the product in the country* 3. Total production in the country* 4. Quantities imported in the country** 5. Total production by the company 6. % age share of the company in total inland production (item 5/item 3) 7. ( a ) Cost of production per Unit (Inland sale) ( b ) Cost of Sale per Unit (Inland sale) ( c ) Cost of production per Unit (Export sale) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specify) 5. Others, if any (specify) 6. Total 24. Financial position and ratio analysis Particulars Current year* Two Previous Years Separately Product under reference Factory as a whole Company as a whole Product under reference Factory as a whole Company as a whole 1. 2. 3. 4. 5. Capital employed Net Worth Profit Net Sales Operating expenses as a percentage of Net Sales: ( a ) Material cost ( b ) Factory overheads ( c ) Royalty on production, if any ( d ) Salaries and wages ( e ) Research and development expenses ( f ) Quality control ( g ) Administrative overheads ( h ) Selling and distribution ( i ) Interest 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Profit as %age of capital employed Profit as %age of net worth Profits as %age of net sales Profit as %age of value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions separately. 27. Central Excise reconciliation for the product under Reference Particulars Chapter Heading Chapter Heading Chapter Heading A. 1. 2. 3. 4. Quantitative Details: Opening Stock Add: Production Less: Closing Stock Total Sales/Clearances Unit Unit Unit Particulars Assessable Value (Rs.) Rate of Duty Amount of Duty (Rs.) B. 1. 2. 3. 4. 5. Details of Clearances Total Clearances (Chapter heading-wise Less: Duty Free Clearances (factory) Excisable Clearances (factory) Penalty/Fine/Interest payable if any Total Duty Payable (total 3 4) Particulars Assessable Value (Rs.) Rate of Duty Amount of Duty (Rs.) C. 1. 2. 3. 4. 5. 6. 7. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss as per financial accounts Explanation . For the purpose of these rules: ( a ) "Capital Employed" means average of fixed assets at net book values (excluding intangible assets effect of revaluation of fixed assets, capital works-in-progress) and current assets minus current liabilities and provisions existing at the beginning and close of the financial year. ( b ) "Net Worth" means share capital plus reserves and surplus (excluding revaluation reserve) less accumulated losses and intangible assets. ( c ) "Profit" means operating profit after providing for depreciation and all other expenses except interest on borrowings including debentures but before providing for taxes on income. ( d ) "Net Sales" means sales excluding sales returns excise duties, sales tax, octroi, other local taxes and expenses refundable/recoverable from buyers/customers. ( e ) "Value Addition" means the difference between the net output value (net sales adjusted for work-in-progress and finished goods stock) and cost of bought out materials and services for the product under reference. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be specified) Current Year Previous Year 1. 2. 3. 4. 5. 6. 7. ( i ) Installed capacity ( ii ) Capacity enhanced during the year by leasing arrangement, etc. Actual production/output ( i ) Self ( ii ) third parties, if any, Production as percentage of installed capacity Captive consumption, if any Quantity sold ( a ) Domestic ( b ) Export Closing Stock (finished goods) Opening Stock (finished goods) B. Cost Information Sr. No. Particulars Quantity unit Rate per unit Amount Cost per unit (Rs.) (Rs.) Current year (Rs.) Previous year (Rs.) 1. Material consumed: (item-wise covering at least 80% of items by value) 1. Purchased ( a ) Indigenous (specify) ( b ) Imported (specify) 2. Self-manufactured (specify) 2. Process chemicals (specify) 3. Utilities 1. Purchased ( a ) Indigenous (specify) ( b ) Imported (specify) 2. Self manufactured (specify) 4. Direct wages and salaries 5. Consumable stores and spares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notes. 1. Separate proforma shall be prepared for each type/variety/description of product(s) under reference. 2. Separate proforma shall be prepared for the quantity used for captive consumption, quantity, sold within the country and the quantity exported. Expenses incurred on export and the incentive earned thereon shall be indicated in the proforma applicable for the quantity produced and exported. 3. Separate proforma shall be prepared for any related party/inter-unit transfer of intermediate/finished product(s) under reference. 4. The administrative overheads shall be included in the cost of production only to the extent they contribute in putting the goods produced to their present location and condition. The balance of administrative overheads, if any, shall be included in the cost of goods sold. The proforma may be amended accordingly, if required. 5. The proforma may be suitably modified to cover the special features, if any, of the product under reference on the basis of proforma prescribed for working out cost of sales, margin, etc. of the said product in the relevant Cost Accounting Records Rules. 6. Indicate whether the prices of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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