Cost Audit Report –Form CRA 4 Due Date Extension for FY 2020-21

On account of extraordinary disruption caused due to the COVID 19 pandemic, the Ministry of Corporate Affairs (MCA) vide Circular dated 27.09.2021 has announced the extension of the CRA 4 (Cost Audit Report) filing period for the fiscal year FY 2020-2021.  As per the MCA notification, the Cost Audit Report deadline for FY 2020-2021 has been extended to 30^th November 2021, if the Cost Auditor submits the Cost Audit report to Board by October 31^st, 2021. The Ministry also provided relaxation of additional fees under the Companies Act, 2013. This article summarizes the extensions provided and attempts to clarify the basics of the Cost Audit Report.

The Gist of MCA Notification

The Ministry of Corporate Affairs is provided relaxation of additional fees and extension of the last date for filing of Form CRA-4 for the financial year 2020-2021.

• If the cost audit report for the financial year 2020-2021 is submitted by the cost auditor to the Board of Directors of the companies by October 31^st, 2021 then the same will not be viewed as a violation of rule 6(5) of Companies (Cost Records and Audit) Rules 2014.
• The cost audit report for the fiscal year ending March 31, 2021, will be archived in the CRA 4 electronic form within 30 days from the date of receipt of the copy of the cost audit report by the company
• If a company has made use of an extension of the deadline for holding an annual general meeting (AGM), then the electronic form CRA4 must be filed within the timeline provided under the provision of rule 6(6) of the Companies (Cost Records and Audit Rules), 2014)

The official notification of the Ministry of Corporate Affairs is attached here for reference:

Earlier Announcement

According to the MCAs, earlier announcement Cost Auditor needs to submit CRA report till 30.09.2021 and Company need to file Form CRA-4 till 30^th Oct 2021. As mentioned above, MCA now announced that the Cost Audit Report deadline for FY 2020-2021 has been extended to  November 30^th, 2021.

What is a Cost Audit Report?

A cost audit report in India is a detailed examination of a company's cost records and accounting practices. It involves verifying the accuracy of cost data, assessing compliance with cost accounting standards, and evaluating the efficiency of cost control measures. This report is typically conducted by a qualified cost auditor who is appointed by the company. The cost audit report provides valuable insights into a company's cost structure, identifies areas for cost reduction, and helps ensure that the company is complying with relevant regulations. The report is submitted to the Board of Directors and is also filed with the Central Government as per the regulations set forth by the Companies Act, 2013.

Cost Audit Report Applicability

Cost audit is a mandatory requirement for certain companies in India as per the Companies (Cost Records and Audit) Rules, 2014. The applicability of cost audit is primarily determined by the company's sector and annual turnover.

Sectors Covered

The rules categorize companies into two broad sectors:

• Table A: Regulated sectors such as electricity, petroleum, drugs, fertilizers, sugar, etc.
• Table B: Non-regulated sectors such as automobiles, cement, steel, paper, textiles, etc.

Turnover Criteria

The specific turnover thresholds for cost audit applicability vary based on the sector:

• Regulated Sectors (Table A):
  • Overall annual turnover: ₹50 crores or more.
  • Aggregate turnover of specific products or services: ₹25 crores or more.
• Non-Regulated Sectors (Table B):
  • Overall annual turnover: ₹100 crores or more.
  • Aggregate turnover of specific products or services: ₹35 crores or more.

If a company meets both criteria, it is required to undergo a cost audit. However, if a company falls below either threshold, cost audit is not mandatory. Nonetheless, the company is still obligated to maintain cost records as per the prescribed rules.

In essence, cost audit ensures that companies, particularly those operating in sectors with significant public interest or economic impact, maintain accurate cost records and adhere to sound accounting practices.

Governing Law  - Cost Audit Report

The requirements concerning Cost Records and Cost Audit applicability are provided in Section 148 of the Companies Act, 2013. Details of the company that are required to keep Cost Records, undergo a Cost Audit, and submit a Cost Audit Report are provided under Rule 3 of the Companies (Cost Records and Audit) Rules, 2014

Companies Required Conducting a Cost Record Audit

The below-mentioned companies are required to file the Cost Audit Report in Form CRA-4 to the board Non-Regulated Sectors

• Non-regulated sectors dealing with specified goods or services and overall annual total turnover from all products or services is Rs.100 Crore or more
• Non-regulated sectors dealing with specified goods or services aggregate turnover from the individual product or service is Rs.35 Crore or more

Regulated sectors

• Regulated sectors dealing with specified goods or services which overall annual total turnover from all products or services is Rs.50 Crore or more
• Regulated sectors dealing with specified goods or services which aggregate turnover from the individual product or service is Rs.25 Crore or more

Exemption from Conducting a Cost Record Audit

The following companies are exempted from Conducting a Cost Record Audit

• The company’s export revenue in foreign exchange exceeds 75% of total revenue
• The company operates from a Special Economic Zone (SEZ)
• The company is engaged in the production of electricity through Captive Generating Plant

Form CRA 4 - Cost Audit Report

Form CRA 4 is used for filing a Cost Audit Report with the Government. On the receipt of the Cost audit report from Cost auditors, the firm needs to submit the same to MCA in form CRA-4 within 30 days from obtaining the audit report. The applicant needs to access the official website of the Ministry of Corporate Affairs (MCA) for the Filing of eForm.

Fee for filing CRA 4 (Cost Audit Report)

The fee for filing CRA 4 (Cost Audit Report) is tabulated here for reference according to the Companies (Registration Offices and Fees) Rules, 2014

Sl.No	Nominal Share Capital of the Company	Fee applicable
1	Less than 1,00,000	Rs. 200 per document
2	1,00,000 to 4,99,999	Rs.300 per document
3	5,00,000 to 24,99,999	Rs. 400 per document
4	25,00,000 to 99,99,999	Rs. 500 per document
5	1,00,00,000 or more	Rs. 600 per document

The fee for filing CRA 4 in case a company does not have share capital is Rs.200 per document.

Penalty for Late Filing of Form CRA-4

Sl.No	Period of Delays	All Forms
1	Up to 30 days	2 times of normal fees
2	More than 30 days and up to 60 days	4 times normal fees
3	More than 60 days and up to 90 days	6 times normal fees
4	More than 90 days and up to 180 days	10 times of normal fees
5	More than 180 days	12 times of normal fees

Note: As per the MCA notification dated 27.10.2021, the companies are exempted from the payment of an additional fee. Click here to know more about the Documents Required, Procedure for Filing of eForm CRA-4