Cost Audit Applicability Under CRA Rules 2014: What Every CFO Must Know

The Companies (Cost Records and Audit) Rules, 2014 (CRA Rules) mandate that certain companies maintain cost records and get them audited by a Cost Accountant in Practice. Yet, year after year, companies discover their obligations only after receiving a show-cause notice from the Ministry of Corporate Affairs.

This article breaks down who is covered, what is required, and what happens if you miss the deadline.

Who Must Maintain Cost Records?

Rule 3 of the CRA Rules applies to companies engaged in the production of goods or provision of services listed in Table A (regulated sectors) or Table B (non-regulated sectors), with a net worth or turnover above the prescribed thresholds.

• Table A (Regulated): Includes industries like pharmaceuticals, fertilisers, sugar, electricity, petroleum, and telecom.
• Table B (Non-Regulated): Covers a broad range of manufacturing and service sectors.
• Threshold for maintenance: Overall annual turnover of ₹35 crore or more in the immediately preceding financial year.
• Threshold for audit: Overall annual turnover of ₹50 crore or more, or turnover from individual products/services of ₹25 crore or more.

Key Compliance Deadlines

The cost audit report must be submitted to the Board of Directors within 180 days from the close of the financial year. The company must then file Form CRA-4 with the MCA within 30 days of receiving the report.

• Cost Auditor appointment: Within 180 days of the commencement of the financial year (Form CRA-2).
• Cost Audit Report submission to Board: Within 180 days from close of financial year.
• Filing with MCA (Form CRA-4): Within 30 days of receiving the report from the auditor.

Penalties for Non-Compliance

Non-compliance with cost audit requirements attracts penalties under Section 148(8) of the Companies Act, 2013. The company and every officer in default can be penalised. In addition, the MCA has been increasingly active in issuing notices to non-compliant companies.

The prudent approach is to assess applicability proactively — ideally at the start of each financial year — rather than waiting for a regulatory trigger.

How We Can Help

At Basant Das & Co, cost audit is our core competency. Led by CMA. Basant Das FCMA, we assess your applicability, maintain your cost records throughout the year, and deliver a clean, timely cost audit report — so you are never caught off-guard.