Procedure for Appointment
of cost auditor.:
Step
1:Certificate from Cost Auditor
Obtain Certificate from Cost Auditor regarding compliance of
section 224 (1- B) of the Companies Act, 1956.
Step 2: Board
Resolution
Pass Board Resolution
proposing appointment of cost auditor
Step 3:File Form 23C and Due date of filing Form 23C
The Company
shall e-file its application with the Central Government on
www.mca.gov.in portal, in the prescribed Form 23C within ninety (90) days from
the date of commencement of each financial year, along with the prescribed fee
as per the Companies (Fees on Application) Rules, 1999 as amended from time to
time and other documents as per existing practice i.e.
(i)
certified
copy of the Board Resolution proposing appointment of cost auditor;
and
(ii)
copy
of the certificate obtained from the cost auditor regarding compliance of
section 224 (1- B) of the Companies Act, 1956
However
where a company is covered under cost audit for the first time vide cost audit
order dated 2nd may 2011 , 3rd may 2011 , 30th
june 2011 or 24th jan 2012 , the period of 90 days shall be counted
from the date of concerned order. Every company has to follow the procedure
prescribed vide MCA Circular No.15/2011 dated April 11 , 2011.
Step 4 : Approval by Central Govt.
Prior approval would be deemed to have been granted
if the Central Government does not raise any query within 30 days of filing of
Form 23C.
In case the Central Government raises any query
within the said period of 30 days, the company would be required to clarify the
issues and re-submit the Form 23C. The period of 30 days, in this case, would
run from the date of resubmission of Form 23C.
Step 5 Formal letter
of appointment to the Cost Auditor
After obtaining
approval of the Central Government (deemed or otherwise),the Company will be
required to issue a formal letter of appointment to the cost auditor.
Step 6 File Form 23D by Cost Auditor
The Cost Auditor
is required to inform the Central Government within thrity days of receipt of
formal letter of appointment from the Company. Such intimation is required to
be done in prescribed e-Form 23 D along with a copy of such appointment.
Other Points
( a)
Competent Authority :
As per provisions of section 233B(2), the Board of
Directors of a Company can appoint a cost auditor after obtaining prior
approval of the Central Government. Under the revised procedure, the first
point of reference will be the Audit Committee to ensure that the cost auditor
is free from any disqualification as specified under section 233B (5) read with
section 224 and sub-section (3) or sub-section (4) of section 226 of the
Companies Act, 1956. The Audit Committee should also ensure that the cost
auditor is independent and is at arm's length relationship with the company.
After ascertaining the eligibility, the Audit Committee will recommend to the
Board of Directors for appointment of the Cost Auditor.
In
those companies where constitution of an Audit Committee is not required by
law, the functions of the "Audit Committee" as per the procedure will
be discharged by the "Board of Directors".
( b) Disclosure
to be made by Company in Annual Report:
The Company is required to
disclose full particulars of the cost auditor along with the due date and
actual date of filing of the Cost Audit Report by the cost auditor, in its
Annual Report for each relevant financial year. Since the notification has made
effective from April 1, 2011, companies under cost audit are required to
furnish the details in its Annual Report from the financial year 2010-11.
Since the cost audit report of a
particular financial year may not have been submitted before publication of the
Annual Report, relevant details of due and actual date of filing for the last
financial year and the due date of filing for the current year may be published
in the Annual Report.
© Additional Fee for Late filing of Form 23C
Till 6th
August 2012 , there were no penal provisions in the companies ( Fees on
Applications) Rules, 1999 for delay in filing of Forms but as per MCA notification dated 7th August 2012
, the penal provisions have been made applicable which are given below.
Period of Delay
Fee Payable with the Application
Up to 30 days
|
Two times of normal fee
|
More than 30 days
and up to 60 days
|
Four times of normal fee
|
More than 60 days
and up to 90 days
|
Six times of normal fee
|
More than 90 days
|
Nine times of normal fee
|
(d) Normal Fee as per the Companies (Fees on
applications ) Rules , 1999 :
Application
made by : Amount
of Fees to be paid(Rs.)
1
A Company having an Authorised Share Capital of
(a) Less than Rs.25
Lakh 500.00
(b) Rs.25 Lakh or more but less than Rs.5 Cr 1000.00
(c) Rs. 5 Cr or
More 2000.00
2. A company limited by Guarantee but not
having a share capital 500.00
3. By an Association or proposed company for
issue of licence
under section 25
of the Act
500.00
4. By a company having a valid licence issued
under section 25 of the Act 500.00
5. By a Foreign Company 1000.00
PENAL
PROVISIONS FOR NON-COMPLIANCE:
NON-COMPLIANCE BY COMPANY
If a Company contravenes any provision of this
circular, the company and every officer thereof who is in default, including
the persons referred to in sub-section (6) of Section 209 of the Act shall be
punishable as provided under sub-section (2) of Section642 read with
sub-section (5) and (7) of Section 209 and sub-section (11) of Section 233B of
Companies Act, 1956.
Relevant provisions of Section 209 of the Companies Act, 1956
are as follows:
Sub-section (5) of Section 209 provides that if any of
the persons referred to in sub-section (6) fails to take all reasonable steps
to secure compliance by the company with the requirements of this section, or
has by his own wilful act been the cause of any default by the company there under,
he shall, in respect of each offence, 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:
Provided that in any proceedings against a person in
respect of an offence under this section consisting of a failure to take
reasonable steps to secure compliance by the company with the requirements of
this section, it shall be a defence to prove that a competent and reliable
person was charged with the duty of seeking that those requirements
werecomplied with and was in a position to discharge that duty:
Provided further that no
person shall be sentenced to imprisonment for any such offence unless it was
committed wilfully.
Sub-section (6) of
Section 209 provides that the persons referred to in sub-section (5) are the
following, namely:—
(a) where the company has a managing director or
manager, such managing director or manager and all officers and other employees
of the company; and
(d)
where the company has neither a managing director nor manager, every director
of the company;
Sub-section
(7) of Section 209 provides that if any
person, not being a person referred to in sub-section (6), having been charged
by the managing director, manager or Board of directors, as the case may be,
with the duty of seeing that the requirements of this section are complied with
makes default in doing so, he shall, in respect of each offence, be punishable
with imprisonment for a term which my extend to six months, or with fine which
may extend to ten thousand rupees, or with both.
Relevant provision
of Section 642 of the Companies Act 1956
is as under:
Sub-section
(2) of Section 642 provides that any rule made under sub-section (1) may
provide that a contravention thereof shall be punishable with fine which may
extend to five thousand rupees and where the contravention is a continuing one,
with a further fine which may extend to five hundred rupees for every day after
the first during which such contravention continues.
Non
compliance by Cost Auditor:
If default ismade by the cost auditor in
complying with the aforesaid provisions, he shall be punishable with fine,
which may extend to five thousand ruppees
RESOLUTION
DRAFT
BOARD RESOLUTION - FOR APPOINTMENT OF COST AUDITOR
M/s ........................................................ held at the office of the
Company on -------------------.
Secretary tabled the MCA
order F.No.52/26/CAB -2010 Dt. 24-01-2012 ordering the Cost Audit of .................................................................................. for the year 2012-13.
The Chairman informed the
Board that A.Krishna Dasan & Co ,
Cost Accountants have given
their consent to act as cost auditor(s)
and certificate for their independence and Arm’s Length relationship with the
company and laid on the table the certificates received from A.Krishna Dasan
& Co , Cost Accountants .
It was accordingly
RESOLVED that, pursuant to
section 233B of The Companies Act, 1956 and subject to the approval of the
Central Government A.Krishna Dasan & Co , Cost Accountants be and hereby
appointed as the cost auditor(s) of the company to conduct audit of cost
accounting records maintained by the Company for product(s)/Services covered
under MCA Cost Audit Order(s) for the year ending on 31-03-2013 at a remuneration of Rs. ------------------ plus service tax and
out-of pocket expenses.
FURTHER RESOLVED that the
Secretary/Director of the company be and is hereby directed to submit the
necessary application in Form 23 C to the Central Government and to do all such
acts as may be necessary.
CMA Krishna Dasan.A
Mob: 98711-28831
E Mail: aknair2002@cmaglobal.net.in