Companies engaged in specified products or services must maintain cost records once turnover crosses ₹35 crore in the preceding financial year. The firm helps set up the record-keeping system, maps it to Form CRA-1 and maintains the records on a monthly or quarterly cycle.
Scope of service
- Applicability assessment under Rule 3 for each product and service
- Design of cost centres, cost objects and allocation bases
- Periodic cost statements in the CRA-1 structure
- Reconciliation of cost records with financial books
- Readiness of records for the statutory cost audit
Regulatory framework
- Companies Act, 2013 — section 148(1)
- Companies (Cost Records and Audit) Rules, 2014 — Rules 3 and 5; Form CRA-1
- Cost Accounting Standards (CAS 1 to CAS 24) as applicable
Typical professional activities
- Mapping of chart of accounts to cost elements
- Material, labour and overhead absorption working papers
- By-product, joint product and scrap treatment
- Quarterly cost statements for management review
Applicable industries
Relevant articles and resources
- CAS-2: capacity determination and the cost of idle capacity
- CAS-4: cost of production for captive consumption
- CAS-6: measuring material cost
- CAS-7: employee cost in product costing
- Knowledge Centre: Cost Accounting
- Product Costing Calculator
Frequently asked questions
When must a company maintain cost records?
A company producing goods or providing services listed in Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 must maintain cost records if its overall turnover in the preceding financial year was ₹35 crore or more.
In what form are cost records kept?
Cost records are maintained in Form CRA-1, on a regular basis, so that the cost of each product or service can be calculated for each period. They must be preserved for at least eight financial years.
Do cost records require a cost audit?
Not always. Cost audit applies only when the higher turnover thresholds in Rule 4 are met. A company may need to maintain records without needing an audit.
The information on this page describes the nature of the service. It is not advice on any specific matter. See the disclaimer.