Who Can Be Appointed as Cost Auditor of a Company

The dismissal is effected by a resolution of the Board of Directors adopted by the Board of Directors at its meeting. Upon removal, the Board of Directors shall take the necessary steps to appoint a new auditor and, within 30 days of the date of such appointment, submit Form CRA-2 notifying the central government of the appointment of a new auditor. The company shall attach the corresponding resolution of the Board of Directors. The board of directors of the Société shall adopt a resolution to that effect. In companies where the formation of an audit committee is not required by law, the tasks of the “audit committee” are carried out by the “board of directors” in accordance with the procedure. Once the online application has been completed by the Company, it will be deemed to have been approved by the Central Government, unless otherwise heard within 30 (thirty) days from the date of completion of such application, the Central Government will request the Company to resubmit the application, additional information or explanations may be provided in this direction. The thirty-day period for Central Government approval is counted from the date of the Company`s resubmission of Form 23C. Important Note: An incidental vacancy in the position of auditor, whether due to resignation, death or dismissal, must be submitted by the Board of Directors within 30 days of the date of occurrence of such vacancy, and the company must notify the central government in the same form CRA 2 within 30 days of the appointment of the cost auditor Rule 14 of the Company Rules (audit and audit), 2014 – For the purposes of Article 148(3), in the case of entities required to form audit committees, the Management Board shall appoint a person who is a practising cost accountant or a cost accountant in practice as a cost auditor on the recommendation of the audit committee, which shall also recommend the remuneration of the auditor. In accordance with the provisions of Article 233 B(2), the board of directors of a company may appoint a cost auditor with the prior approval of the central government (India). The audit committee must also ensure that the auditor is independent and has an independent relationship with the entity. Once eligibility is determined, the audit committee recommends that the board appoint the auditor. This means that companies subject to cost audits appoint a cost auditor for each financial year.

To perform the cost audit, the person must be a member of the Institute of Cost Accountants of India, which was established under the Cost and Works Accountants Act, 1959, and have a valid membership and certificate of practice. The Company must file Form CRA-4 with the Central Government within 30 days of the date of the Board of Directors meeting at which the decision on such appointment is made. A person proposed for appointment as a company`s cost auditor must have the following qualifications: Therefore, the appointment of a cost controller remains in effect either until the cost audit report is submitted or until the end of 180 days after the end of the fiscal year. Until it submits the audit report for the fiscal year for which it was appointed. Design and implementation of the cost accounting system; or the keeping of cost accounting records or the share is an internal auditor, whether acting individually or through the same company or through other group companies in which he or a partner has a common interest. For example: The company is engaged in the production of cement. The annual turnover of the financial year 2019-20 exceeds Rs 100 crore and the turnover of individual products exceeds Rs 35 crore. Where, in proceedings against a person for a breach of this Section of failing to take reasonable steps to ensure that the undertaking complies with the requirements of this Section, it must be demonstrated that a competent and reliable person has been responsible for ensuring compliance with those requirements and has been able to: To fulfill this obligation: In the procedure for appointing the auditor, it is mentioned that the audit committee of the company is required to obtain from the appointed auditor a certificate attesting that it has complied with the provisions of § 224 (1-B) and on its independence and arm`s length relationship with the company. The explanation is given below: the auditor is required to inform the central government within thirty days of receiving the official letter of appointment from the company.

This notice must be made in the required electronic form 23D accompanied by a copy of the appointment. In addition, by Communication No. 52/196/CT/44/78 of 20 January 1983, the Government stated that a person who is an internal auditor cannot also be a cost controller of the same company during a period during which he is the internal auditor of the company. In accordance with section 148(3) of the Companies Act 2013, the cost review is carried out by the current cost accountant, who is appointed by the board to the remuneration determined by the members in the manner required. If an entity contravenes any provision of the Cost Audit Act, the Corporation and all officers in default, including those referred to in subsection (6) of section 209 of the Act, are liable to prosecution under subsection (2) of section 642 in conjunction with subsections (5) and (7) of sections 209 and subsection (11) of section 233B of the Corporations Act. 1956. Paragraph 5 of Article 209 provides that if any of the persons referred to in paragraph 6 fail to take all reasonable measures to ensure compliance by the Society with the requirements of this Article or if his own intentional act has been the cause of a violation by the Society, he shall be liable to imprisonment for a term not exceeding six months or a fine not exceeding ten thousand rupees, or both, for any offence. become. Where a member of an audit firm acts simultaneously as statutory auditor of one or more firms, the total number of firms eligible for consideration in his or her case shall not exceed the total number set.