Cost Audit Requirements in India
The Companies (Cost Records and Audit) Rules, 2014 regulate cost records and audits of costs in India. The relevance of cost audits is determined by turnover limits and the industry in which the business functions.
Applicability of Cost Audit
Regulated Sectors
An organization in a regulated industry is required to perform a cost audit if:
• Its overall revenue surpasses ₹50 crore, or
• The revenue of a single product or service surpasses ₹25 crore.
Example:
A cement manufacturing company with a turnover of ₹60 crore must conduct a cost audit.
Non-Regulated Sectors
A business operating in a non-regulated industry is required to perform a cost audit if:
• Its overall revenue surpasses ₹100 crore, or
• The revenue generated by a single product or service surpasses ₹35 crore.
Example:
A cost audit is required for an e-commerce platform with an overall turnover of ₹105 crore.
Other Sectors
In sectors like agriculture or small enterprises, cost audit obligations usually do not exist unless outlined by different regulations.
Deadline for Submitting Cost Audit Reports
The cost audit report must be filed within 180 days from the end of the financial year, i.e., by September 30th for the financial year ending on March 31st.
