Ministry of Corporate Affairs of Republic of I : Notice inviting comments on Draft Companies (Cost Records and Audit) Amendment Rules, 2017 including summary of changes (384 KB)

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08/13/2017 | 01:56 am
Government of India Ministry of Corporate Affairs NOTICE INVITING COMMENTS ON THE DRAFT COMPANIES (COST RECORDS AND AUDIT) AMENDMENT RULES, 2017

Dated: 11th August, 2017

Pursuant to implementation of IndAS, the Companies (Cost Records and Audit) Rules, 2014 are to be amended to bring parity between financial records and cost records. Accordingly, the Draft Companies (Cost Records and Audit) Amendment Rules, 2017 have been placed on the Ministry's website www.mca.gov.in for suggestions/ comments.

Suggestions/ comments on the draft rules along with justifications in brief may be sent latest by 26/08/2017 through email at comments_cra@mca.gov.in

It is requested that the name, contact number, email address and postal address of the sender be indicated clearly at the time of sending suggestions/comments in the following format:-

Format for sending suggestions/comments
  1. Name, contact number, email address and postal address of stakeholder

  2. Suggestions/comments as under

Serial Number

Rule/para/clause/ subclause

Suggestion/ comments

Justification

******

Summary of changes as per Draft Companies (Cost Records and Audit) Amendment Rules, 2017

FORM CRA-1

(Pursuant to rule 5(1) of the Companies (Cost Records and Audit) Rules, 2014) Particulars relating to the Items of Costs to be included in the Books of Accounts

Para

Existing

Revised

1

Material Costs

(e)

Spares which are specific to an item of equipment shall not be taken to inventory, but shall be capitalized with the cost of the specific equipment. Cost of capital spares or insurance spares, whether procured with the equipment or subsequently, shall be amortised over a period, not exceeding the useful life of the equipment.

Spares which are specific to an item of equipment shall not be taken to inventory, but shall be capitalized with the cost of the specific equipment. Cost of capital spares or insurance spares, whether procured with the equipment or subsequently, shall be amortised over a period, not exceeding the useful life of the equipment. In case of companies to which Indian Accounting Standards apply, items such as spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment when they meet the definition of property, plant and equipment and depreciated accordingly. Otherwise, such items are classified as inventory.

(j)

Subsidy or Grant or Incentive and any such payment received or receivable with respect to any material shall be reduced from cost for ascertainment of the cost object to which such amounts are related.

Subsidy or Grant or Incentive and any such payment received or receivable with respect to any material shall be reduced from cost for ascertainment of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the cost of materials in the financial year when such deferred income is recognised as income.

2

Employee Cost

(b)

Employee Cost shall be ascertained taking into account

Employee Cost shall be ascertained taking into account the gross pay including all allowances

Para

Existing

Revised

the gross pay including all allowances payable along with the cost to the employer of all the benefits.

payable along with the cost to the employer of all the benefits, including the cost of retirement benefits charged in the financial statements in an accounting period. In case of companies to which Indian Accounting Standards apply, any re-measurement of such costs recognized in other comprehensive income shall not form part of the employee cost.

(i)

Any Subsidy, Grant, Incentive or any such payment received or receivable with respect to any Employee cost shall be reduced for ascertainment of cost of the cost object to which such amounts are related.

Any Subsidy, Grant, Incentive or any such payment received or receivable with respect to any Employee cost shall be reduced for ascertainment of cost of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the employee cost in the financial year when such deferred income is recognised as income.

3

Utilities

(l)

Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any cost of utilities shall be reduced for ascertainment of the cost to which such amounts are related.

Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any cost of utilities shall be reduced for ascertainment of the cost to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the utility cost in the financial year when such deferred income is recognised as income.

4

Direct Expenses

(h)

Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any Direct Expenses shall be reduced for ascertainment of the cost object to which such amounts are related.

Any Subsidy or Grant or Incentive or any such payment received or receivable with respect to any Direct Expenses shall be reduced for ascertainment of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the direct

Para

Existing

Revised

expenses in the financial year when such deferred income is recognised as income.

5

Repair and Maintenance

(j)

High value spare, when replaced by a new spare and is reconditioned, which is expected to result in future economic benefits, the same shall be taken into stock. Such a spare shall be valued at an amount that measures its service potential in relation to a new spare which amount shall not exceed the cost of reconditioning the spare. The difference between the total of the cost of the new spare and the reconditioning cost and the value of the reconditioned spare should be treated as repairs and maintenance cost.

Deleted

(o)

Subsidy or Grant or Incentive or amount of similar nature received or receivable with respect to repairs and maintenance activity, if any, shall be reduced for ascertainment of the cost object to which such amounts are related.

Subsidy or Grant or Incentive or amount of similar nature received or receivable with respect to repairs and maintenance activity, if any, shall be reduced for ascertainment of the cost object to which such amounts are related. In case of companies to which Indian Accounting Standards apply, any such Grants recognized as deferred income shall be reduced from the repair and maintenance cost in the financial year when such deferred income is recognised as income..

6

Fixed Assets and Depreciation

Fixed Assets and Depreciation

(a)

Proper and adequate records shall be maintained for assets used for production of goods or rendering of services under reference in respect of which depreciation has to be provided for. These records shall, inter-alia,

Proper and adequate records shall be maintained for assets used for production of goods or rendering of services under reference in respect of which depreciation/amortisation has to be provided for. These records shall, inter-alia, indicate grouping of assets under each good or service, the cost of acquisition of each item of

Ministry of Corporate Affairs of the Republic of India published this content on 11 August 2017 and is solely responsible for the information contained herein.
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