Cost Accounting Record Rules, CARR, Features, Records to be maintained

1. CARR
{COST ACCOUNTING
RECORD RULES}
Dr Ankita Chaturvedi

2. INTRODUCTION
 “Cost Records” means books of account relating to
utilisation of materials, labour and other items of
cost as applicable to the production, processing,
manufacturing or mining activities of the company.
 CARR refer to be maintance of cost records.
 It aimed at induced the companies to have control
over their operations and cost with the view to
achieve optimum utilisation of resources in the
economy.
DrAnkitaChaturvedi

3.  Cost accounting record rules are prescribed
detailed by the central government.
 It does not mean that their has to be cost audit only.
 cost audit order is seperately issued after the initial
notification of cost accounting record rules.
 The cost audit orders are issued on the selected
companies.
DrAnkitaChaturvedi

4. FEATURES OF COST ACCOUNTING
RECORD RULES
 Applicable to every Company including a foreign
Company engaged in production, processing,
manufacturing or mining wherein;
 The aggregate value of net worth as on the last
date of the immediately preceding financial year
exceeds Rs.5 crores or,
 The aggregate value of the turnover made the
company from all products or activities during the
immediately preceding financial year exceeds
Rs.20 crores or,
 The company’s equity or debt securities are listed
or are in the process of listing on any stock
exchange
DrAnkitaChaturvedi

5. MAINTENANCE OF RECORDS
 Every Company including all units and branches
thereof shall, in respect of each of its financial year
commencing on or after 1st day of April, keep cost
records.
 Such records shall be kept on a regular basis in a
manner so as to make it possible to calculate per
unit cost of production or cost of operations, cost
of sales and margin for each of its products and
activities for every financial year on
monthly/quarterly/half-yearly/annual basis.
DrAnkitaChaturvedi

6.  The records shall be maintained in accordance with
generally accepted cost accounting principles and
cost accounting standards issued by ICWAI, to the
extent these are found to be relevant and
applicable.
 These records shall also provide necessary data
which is required to be furnished under these rules.
 “COST RECORDS” means books of accounts
relating to utilisation of materials, labour and other
items of cost as applicable to the production,
processing, manufacturing or mining activities of
the company.
DrAnkitaChaturvedi

7.  The records, cost statements and reconciliation
statements, maintained under these rules shall kept
in good order for a period of 8 years.
DrAnkitaChaturvedi

8. The General Costing Books of Accounts,
records statements common to all
industries specified for maintaining cost
records as given by Cost accounting
(Records) rules are listed below:
 Raw material consumed
 Consumable materials, stores and spare parts.
 Wages and salaries.
 Factory overhead.
 Depreciation.
 Conversion cost.
 Packaging charges.
DrAnkitaChaturvedi

9. RAW MATERIAL, STORES AND SPARE PARTS
During audit drill the auditor is required to examine
certain items.
 Regarding purchases:
 Valid requisition
 Centralization or decentralization
 Terms and conditions of purchases
 Quantity
 Bin card
 Inspection
DrAnkitaChaturvedi

10.  Storage:-
 Storage arrangement.
 Movement of materials.
 loss of raw materials.
 Issues:-
 Method of price increasing.
 Authority.
 Price of return.
 Issue of stores and loose tools.
 Accounting and control:-
 Material abstract.
 Store ledger.
 Stock.
 Wastage.
 Direct charges.
DrAnkitaChaturvedi

11. WAGES AND SALARIES
 Proper recording for attendance
 Piece rate payment
 Overtime payment
 Incentive scheme
 Unit wise segregation
 Capital and revenue
 Direct and indirect
 Wage payment
 Fringe benefits
 Idle time
 Treatment of idle time payment
DrAnkitaChaturvedi

12. OVERHEAD
 These should be examined carefully as they are
controllable and generally play an important role in
total cost of production.
 Classification and coding
 Apportionment
 Absorption rates
 Over or under absorption
 Booking of overheads
 Overhead budget
 Idle time
 Capital revenue
DrAnkitaChaturvedi

13. DEPRECIATION
 Proper and adequate records
 Old assets
 Depreciation to different department
 Method of depreciation
 Calculations
 Basis of allocation
DrAnkitaChaturvedi

14. SALIENT FEATURES OF NEW COST
ACCOUNTING RECORDS RULES, 2011
 Applicability [Rule 3]:
Class of Companies
Nature of Activities:
Cost Accounting Records (Sugar Industry)Rules 2011
Cost Accounting Records (Fertilizer Industry) Rules 2011
Cost Accounting Records (Pharmaceutical Industry) Rules 2011
Cost Accounting Records (Telecommunication Industry) Rules 2011
Cost Accounting Records (Petroleum Industry) Rules 2011
Cost Accounting Records (Electricity Industry) Rules 2011
DrAnkitaChaturvedi

15.  Compliance Report
 Time Limit for Submission:
 Within one hundred and eighty days from the close of the company’s
financial year to which the compliance report relates.
 Authentication and Certification of Compliance Report.
 Compliance of Cost Accounting Standards and Generally
Accepted Cost Accounting Principles.
 Product and Product Group.
 Maintenance of Cost Records.
 Cost Records, Cost Statements and Reconciliation
Statements are to be preserved.
 Penal Provisions.
 Default by a cost accountant
 Contravention by a Company
DrAnkitaChaturvedi

16. CARR OF STEEL PLANT & CEMENT
 G.S.R. 574. - In exercise of the powers conferred by sub-
sections (1) and (2) of section 642, read with clause (d) of sub-
section (1) of section 209 of the Companies Act, 1956 (1 of
1956), herein after referred to as the said Act, the Central
Government hereby makes the following rules, namely:
 Short title and commencement.
 Application.
 Maintenance of Records.
 Penalty.
DrAnkitaChaturvedi

17. SCHEDULE
 Materials.
 Salaries and wages.
 Services department expenses.
 Utilities.
 Workshop/repairs and maintenance/tool rooms.
 Depreciation.
 Royalty/Technical know-how fee.
 Other Overheads.
 Conversion Cost.
 Conversion Cost.
 Interest
 Expenses/Incentives Ion Exports.
DrAnkitaChaturvedi

18.  By-Products.
 Joint Products.
 Captive Consumption.
 Expenses of Capital Nature.
 Semi-finished goods and finished goods, stocks.
 Cost Statements.
 Production Records.
 Reconciliation of Cost and Financial Accounts.
 Adjustment of Cost Variances.
 Records of physical verifications.
 Inter-Company Transactions.
 Statistical Record.
DrAnkitaChaturvedi