Summary of Circular:-
1. Appointment of Cost Auditor will not require prior approval from Central Government.
2. Appointment of Cost Auditor -First Point of Reference is Audit Committee ( AC)
3. Companies where Audit Committee (AC) not required by Law, Board of Directors (BOD) be the first point of reference.
4. AC / BOD to ensure such appointment is free from disqualifications U/S 233B(5) & 224 (3) & (4) of Companies Act.
5. Compliance from Cost Auditor & AC , on non-violation of limits U/S 224 (1-B).
6. AC / BOD to obtain Certificate from Cost Auditor certifying its Independence.
7. Company to File Form 23C by 90 days of start of financial year along with:-
a. B oard Resolution for Appointment of Cost Auditor
b. Certificate from Cost Auditor -Compliance U/s 224 (1-B)
8. E-form approved by Central Govt (CG) by 30 days. If not approved to be resubmitted as per details requested.
9. Company to issue formal letter of appointment to Cost Auditor approved by Board within 30 days of approval of E-Form.
10. Cost Auditor to file E-Form ( Yet to be Developed by MCA) to MCA for such appointment.
11. Disclosure by Companies in Annual Report about Cost Auditor, Due & Actual date of filing of Cost Audit Report.
12. Contravention of provisions of this Circular:-
a. Company :- Punishable U/S 642(2) / 209 (5) & (7) / 233B(11) of Companies Act 1956.
b. Cost Auditor :- Fine extended to Rs. 5000/-
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