1. For Information Circulation Only RAVI MONGA & CO – COST ACCOUNTANTS
Ph.: 8285363960
CONSTRUCTION INDUSTRY – APPLICABILITY OF COST AUDIT
The Central Government issued Companies (Cost Records and Audit) Rules, 2014 on June
30, 2014. Subsequently, it issued Companies (Cost Records and Audit) Amendment Rules, 2014 on
December 31, 2014. The Companies (Cost Records and Audit) Rules, 2014 read with Amendment
Rules 2014 are now applicable to Construction Companies , Roads and
Infrastructure Companies.
Now, the question arises as to how we determine that a particular company is covering under
these rules? .......... You can check the applicability rules by following the given steps:
APPLICABILITY OF COST RECORDS MAINTENANCE AND COST AUDIT
W.E.F. 1ST APRIL, 2014 ONWARDS
Steps Rules of Coverage for “Roads
and Infrastructure Projects
Rules of Coverage for
Construction Industry
1 Projects /
Activity
Crieria
Check out the
Projects/
activities
undertaken by
the company : -
If any of the
company is
carrying out or
undertaking
these kinds of
projects then
Move to Step 2.
It has been defined to be corresponding
to Para No.1(a) as specified in Schedule
VI of the Companies Act, 2013. According
to this sub-clause, It covers
 Roads;
 National highways;
 State highways;
 Major district roads;
 Other district roads and
 Village roads, including
 Toll roads,
 Bridges,
 Highways,
 Road transport providers and
 Other road related services.”
Hence every activity including
construction and maintenance of
the above projects are covered
under the rules.
Construction Industry has been defined
to be corresponding to Para No. (5)(a) as
specified in Schedule VI of the
Companies Act, 2013.
Para (5) pertains to
 Industrial;
 Commercial;
 Social development and
maintenance
And Covers “ real estate
development, including an
industrial park or special
economic zone”.
Hence, every construction
activity in relation to the above
are covered under the rules
2 Turnover
Criteria
Check out the
Turnover of the
company in
immediate
preceding
financial Year
(A) For Cost Record Maintenance :
Turnover in PFY ≥ Rs. 35 Cores
(B) For Cost Audit
Turnover in PFY ≥ Rs. 100 Cores
NOTE: For This Purpose Turnover means Gross Turnover from the sale or supply of
all products or services during the financial year. It includes Turnover from Job work
or Loan License operations and Export benefit received but exclude duties and
taxes.

2. For Information Circulation Only RAVI MONGA & CO – COST ACCOUNTANTS
Ph.: 8285363960
.
Duties of the Companies
(in relation to provisions of Section 148 of the Companies Act, 2013
and the rules framed there under)
Steps What to do?
1 Appoint a Cost Auditor within 180 days of the commencement of
every financial year;
2 Inform the cost auditor concerned of his or its appointment;
3 File a notice of such appointment with CG within a period of 30 days
of the Board Meeting in which such appointment is made or within a
period of 180 days of the commencement of the financial year,
whichever is earlier, through electronic mode, in e-form CRA – 2,
along with the fees as specified in Companies (Registration Offices
and Fees) Rules, 2014;
4 Within a period of 30 days from the date of receipt of a copy of the
cost audit report, furnish the CG with such report alongwith full
information and explanation on every reservation or qualification
contained therein, in form CRA – 4 along with the fees as specified in
Companies (Registration Offices and Fees) Rules, 2014;
Consequences for Non-Compliance of Section 148
 Section 148(8) states that if any default is made in complying with the provisions of
section 148, the company and every officer of the company who is in default shall be
punishable in the manner as provided in Section 147(1).
 Section 147(1) states that the company shall be punishable with fine which shall not be
less than Rs. 25,000 but which may extend to Rs. 5,00,000/- and every officer of the
company who is in default shall be punishable with imprisonment for a term which may
extend to One Year or with fine which shall not be less than Rs. 10,000/- but which may
extend to Rs. 1,00,000/- or with both.

3. For Information Circulation Only RAVI MONGA & CO – COST ACCOUNTANTS
Ph.: 8285363960
Nature of Defaults under section 148
 Non- maintenance of cost records;
 Cost Auditor has not been appointed by the company;
 Late appointment of cost auditor;
 Cost auditor appointed but CRA – 2 form has not been filed with MCA;
 Cost auditor appointed but cost records were not submitted for Cost Audit;
 Non-cooperation regarding the timely completion of cost audit;
 Cost Audit report not approved within the specified time limit and
 Cost Audit report approved but not submitted to CG by the company.
Feel free to ask any query in respect of above rules or you may ask for a
meeting at the following contacts:
Off. Address : RAVI MONGA & CO – COST ACCOUNTANTS
I – 138, MAHAVIR ENCLAVE,
NEW DELHI – 110045
Phone No. : 8285363960
Mail-Id : rmc.cmaindia@gmail.com
cmaravimonga@gmail.com