Cost Audit under the Companies Act:
Under the Companies (Amendment) Act, 1965, two new amendments have been added to the Companies Act, 1956 in this respect, i.e., Clause (d) to Sub-Sec. (1) of Sec. 209 and 233B to Sec. 233 which have provided for the audit of Cost Accounts in certain cases. Section 209(1) (d).
In case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of materials or labour as to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account.
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It would be observed that the cost audit can be ordered in case of those companies which are required to maintain Cost Accounts under Sec. 209(l)(d) cited above and which are engaged in production, processing, manufacturing or mining activities,
More and more companies are now asked under Sec. 233B to get their Cost Accounts audited.
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The Classes of Companies which are required to maintain cost records under section 209(l) (d) of the Companies Act, 1956 are as follows:
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23. Soda Ash
24. Nylon
25. Polyester
26. Cotton Textiles
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27. Dry Battery Cell
28. Sulphuric acid
29. Steel Tribes & pipes
30. Engineering industries:
(i) Power driven pumps.
(ii) Diesel engines/Internal Combustion Engines.
31. Electric cables & conductors
32. Bearings
33. Milk food
34. Chemical Industries:
(1) Ethylene
(2) Ethylene Oxide
(3) Ethylene Glycol
(4) Diethylene Glycol
(5) Polyethylene Glycol
(6) Ethylene Dichloride
(7) Propylene
(8) Isopropanal
(9) Acetone
35. Formulations. (G. S. R. No. 909(E) Dt. 07-09-88)