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Unit 9: Cost Accounting Records

(viii) Any other product for which representations are received from Consumer Association, Notes
Chamber of Commerce etc. or assurance has been made in Parliament for prescription of
Cost Accounting Records Rules.

9.2.1 Preparation of Preliminary Draft Rules

The officers of Cost Audit Branch visit the sample representative units in the industry to study
and understand the manufacturing process, practices, different stages involved and type of
records maintained by them etc. This is necessary to ensure that only bare minimum additional
record is prescribed, if any required. The Cost Audit Branch prepares the first preliminary draft
of Cost Accounting Records Rules and circulates them to the industry representatives, practicing
cost accountants, experts in the field, Tariff Commission, Cost Accounts Branch under Ministry
of Finance, Administrative Ministry and both the accounting bodies namely Institute of Cost &
Works Accountants of India (ICWAI) and Institute of Chartered Accountants of India (ICAI) for
their comments.
On receipt of the comments, all the suggestions and comments are studied in detail and the draft
cost accounting records rules are revised and finally discussed in an Informal Advisory
Committee Meeting inter-alia attended by reps. of all the aforesaid bodies namely Cost Accounts
Branch, Tariff Commission, Administrative Ministry, ICAI, ICWAI, Expert, Industry Member
etc. The final draft is agreed in this meeting.
The agreed draft rules are then put up for the approval of Union Minister in charge of Ministry
of Corporate Affairs. After the receipt of administrative approval from the Union Minister, the
rules are forwarded to Ministry of Law and Justice for legal vetting and clearance from the legal
angle. If the finally vetted draft rules are at major variance from originally proposed rules, these
rules are again put up for administrative approval. Otherwise, these rules are sent for Hindi
translation.
After the receipt of Hindi translation, the rules are sent for printing or notification in Official
Gazette to Government printing press. Generally, the rules provide that these shall come into
effect from the day it is notified in the Official Gazette.

Note Each rule is given a GSR (General Statutory Rules) No. and date of publication in
the Gazette.

Section 642 (3) of the Companies Act, 1956 provides that ‘Every rule made by the Central
Government under sub-Section (1) shall be laid as soon as may be after it is made before each
House of Parliament while it is in session for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid, both Houses
agree in making any modification in the rule or both Houses agree that the rule should not be
made, the rule shall thereafter have effect only in such modified form or be of no effect, as the
case may be, so, however, that any such modification or annulment shall be without prejudice to
the validity of anything previously done under that rule’.
In view of aforesaid provision, the copies of the notified rules duly authenticated are placed in
both Houses of Parliament for a total period of 30 days as required under Section 642(3) of the
Companies Act, 1956. If both the Houses agree in making any modification in the rules, the rule
shall thereafter have effect only in such modified form.
It may be seen from the above that specific prior approval of Parliament is not required for
notifying the rules as it represent subordinate legislation. However, the rules shall have the

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