Cost Audit

Cost audit is the verification of an entity's cost records and cost statements, and an examination of whether they are maintained and presented as the cost accounting framework requires.

It applies to companies in specified industries above prescribed turnover thresholds under Section 148 of the Companies Act and the Cost Records and Audit Rules, and is conducted by a Cost Accountant; a CA firm advises on records, applicability, and coordination.

Cost audit examines the cost records and statements, including:

• Cost of materials, utilities, labour, and overheads
• Cost allocation, apportionment, and absorption
• Capacity utilisation and reconciliation with financial accounts
• The cost statements in the prescribed formats (CRA-1/CRA-3)

1. 01

   Confirm applicability

   Establish whether cost records and cost audit apply to your products or services.

2. 02

   Records review

   Review the cost accounting records and the systems that produce them.

3. 03

   Audit & report

   Verify the cost statements and prepare the cost audit report (CRA-3).

4. 04

   File CRA-4

   File the cost audit report with the MCA within the prescribed time.

PBT helps you stay compliant on cost records and coordinate the cost audit.

• Clear determination of applicability under the Rules
• Help setting up and maintaining compliant cost records
• Coordination with the cost auditor and the board
• Timely CRA-3 and CRA-4 filing
• Scope, deliverables, and fees agreed in writing up front

• Who conducts a cost audit?

  A Cost Accountant (or firm) appointed under Section 148. A CA firm advises on applicability, records, and coordination, and on the financial reconciliation.

• Does cost audit apply to every company?

  No. Only to companies in the industries and above the thresholds specified in the Cost Records and Audit Rules. We confirm whether it applies to you.

• How long does it take?

  It depends on the number of products and the state of the cost records; we plan it against the MCA filing deadline for CRA-4.