Page 176 - DCOM206_COST_ACCOUNTING_II

Unit 9: Cost Accounting Records

books of accounts of both financial and cost accounts. It would be sufficient if cost accounts Notes
are maintained on a “proforma basis”.
(e) If any company is engaged in manufacturing of any other product(s) or is engaged in other
activities also in addition to the products or activities under reference, the particulars
relating to utilisation of materials, labour and other items of cost in so far as they are
applicable to such other products or activities shall not be included in the cost of the
product or activities under reference.
(f) The rules also specify that the books of accounts and the proformae specified in the rules
shall have to be completed within 90 days of the close of the financial year to which they
relate. This period of ninety days was earlier incorporated in Cost Audit Report Rules
also. But now that has been extended to 135 days under Cost Audit Report Rules, 2001 to
allow companies to fill the various proformae prescribed under the Report Rules and get
them authenticated.

9.4.1 Statistical and other Records

The Cost Accounting Records Rules require that the Statistical and other records shall be
maintained in accordance with the provisions of the Schedule to the respective rules in such a
manner as to enable the company to exercise, as far as possible, control over the various operations
and costs with a view to achieve optimum economies in cost. These records shall also provide
the necessary data required by the Cost Auditor to suitably report on all the points referred to
in Cost Audit Report Rules, 2001 as amended from time to time.
Statistical records represent records like production data, capacity utilisation, machine utilisation,
labour hour etc. The data maintained for the purpose of cost accounting records shall be reconciled
with the report submitted to excise and/or custom department from time to time. Similarly
under the Essential Commodities Act and other legislations on the subject, several reports have
to be submitted to Government authorities in respect of industries like sugar, textiles, etc. The
rules prescribe that the data in the cost accounting records should be reconciled with the returns
submitted to Excise and Government authorities and any discrepancies would need explanation.

9.4.2 Penalty

If the records are not maintained, the company and every officer of the company who is in
default including the persons responsible for compliance of the record rules, shall be punishable
as provided under sub-Section (2) of Section 642 read with sub-Sections (5) and (7) of Section 209
of Companies Act, 1956 (1 of 1956).
Sub-Section (2) of Section 642 of the Companies Act provides with a fine which may extend to
` 5000 and where the contravention is a continuing one, a further fine may be imposed which
may extend to ` 500 for every day during which such contravention continues.
Sub-Section (5) of Section 209 of Companies Act, 1956 provides that if persons responsible under
the Act fails to take all reasonable steps to secure compliance or has caused any default by his
own wilful act, he shall be punishable with imprisonment for a term which may extend to six
months or with fine which may extend to ten thousand rupees or with both. This Section further
provides that a person shall be sentenced to imprisonment for any such offence only if it was
committed wilfully. Sub-Section (7) of the Companies Act, 1956 provides for similar penalties to
a person in case of any default, if such person has been charged with the duty of seeing that the
requirements of Cost Accounting Records Rules are complied with.

LOVELY PROFESSIONAL UNIVERSITY 171