Form II - The Cost Audit Report - Cost Audit Report Rules, 2001

[1] [Form II The Cost Audit Report] [ See rule 2( c ) and rule 4] I/We, ........... having been appointed as Cost Auditor(s) under section 233B of the Companies Act, 1956 (1 of 1956) of .......... (mention name of the company) having its registered office at ........... (mention registered office address of the company) (hereinafter referred to as the company), have examined the books of account prescribed under clause ( d ) of sub-section (1) of section 209 of the said Act, and other relevant records in respect of the unit ............ (mention name and location of the unit) for the period/year ............ (mention the financial year) relating to ........... (mention name of the product or activity) maintained by the company and report, in addition to my/our comments in para 3 relating to auditor's observations and suggestions, that 1. ( i ) I/we have/have not obtained all the information and explanations, which to the best of my/our knowledge and belief were necessary for the purpose of this audit; ( ii ) proper cost accounting records, as prescribed under clause ( d ) of sub-section (1) of section 209 of the Companies Act, 1956, have/have not been kept by the company; ( iii ) proper returns adequate for the purpose of my/our Cost Audit have/have not been received from the branches not visited by me/us; ( iv ) the said books and records give/do not give the information required by the Companies Act, 1956 in the manner so required; ( v ) the cost statements in respect of product or activity under reference as specified in the Annexures/Proforma of Schedule I, Schedule II or Schedule III of the concerned Cost Accounting Records (** .........) Rules duly audited by me/us are kept in the company. 2. In my/our opinion, the company's cost accounting records have/have not been properly kept so as to give a true and fair view of the cost of production, cost of sales and margin of the product under reference as prescribed under the rules. 3. Based on my/our examination of the records of the company subject to the aforesaid qualifications, if any, I/We give my/our observations and suggestions on the following ( a ) the adequacy or otherwise of the cost accounting system including inventory valuation in vogue in the company and suggestions for the improvement thereof. The Cost Auditor shall also indicate the persistent deficiencies in the system, pointed out in earlier reports but not rectified; ( b ) the adequacy or otherwise of the budgetary control system, if any, in vogue in the company; ( c ) matters which appear to him to be clearly wrong in principle of apparently unjustifiable; ( d ) cases, where price charged for related party transactions as defined in the respective Cost Accounting Records Rules is different from normal price, impact of such lower/higher price on margin of the product under reference shall be specified; ( e ) areas where the company is incurring losses or where there is considerable decline in profitability, the cost auditor should comment on the reasons thereof including indicative break-even point. The Cost Auditor shall also comment on the default, if any on the payments due to the Government, financial institutions and banks, penal interest levied thereon and its impact on the cost of sales and profitability; ( f ) steps required to strengthen the company under the competitive environment especially with regard to need for protection from cheaper imports, if any; ( g ) export commitments of the company vis-a-vis actual exports for the year under review. Also comment on comparative profitability and pricing policy of the company for domestic and export sales. Give impact of exports benefits/ incentives offered by the Government on export profitability; ( h ) the scope and performance of internal audit of cost records, if any, and comment on its adequacy or otherwise. 4. The Cost Auditor shall suggest measures for making further improvements in the performance in respect of cost control and cost reduction. 5. The Cost Auditor may also give his other observations and suggestions, if any, relevant to the cost auditor. Dated: this ............ date of ............ 200 ........ at ............. (mention name of place of signing this report). ....................................................... Signature Seal of the Cost Auditor(s) Membership Number Notes . (1) Delete words not applicable. (2) ** Specify the title of the concerned Cost Accounting Records Rules made under clause ( d ) of sub-section (1) of section 209 of the Companies Act, 1956 which are applicable to the product or activity of the company. (3) If as a result of the examination of the books of account, the Cost Auditor desires to point out any material deficiency or give a qualified report, he shall indicate the same against the relevant paras ( i ) to ( vi ) only in the prescribed form of the Cost Audit Report giving details of discrepancies he has come across. (4) The report, suggestions, observations and conclusions given by the Cost Auditor under this paragraph shall be based on verified data, reference to which shall be made here and shall, wherever practicable, be included after the company has been afforded an opportunity to comment on them. Annexure to the Cost Audit Report [ See rule 2( c ) and rule 4] 1. General (1) ( a ) Name and address of the registered office of the company whose accounts are audited. ( b ) Name and address of the place where the cost accounting records are maintained viz . registered office, head office or factory. (2) Name of the product and location of the unit to which the Annexure pertains. (3) The Company's financial year to which the Cost Audit Report relates. (4) Date of first commencement of commercial production of the product under reference. (5) Location of other sites manufacturing or producing or processing or mining the product or carrying out the activity under reference. (6) Name and address of the Cost Auditor. (7) Membership number of the Cost Accountant. In case of firm of Cost Accountants, name and membership number of all the partners. (8) Reference number and date of Government Order under which the Audit is conducted. (9) Reference number and date of the Government letter approving the appointment of the Cost Auditor. (10) Date of Board of Directors' meeting wherein the Annexure and Proforma to the cost auditor report were approved. (11) The number of Audit Committee meetings held by the company, and attended by the Cost Auditor during the year under reference. (12) Name, qualification and designation of the officer heading the cost accounting section or department of the company. (13) In case of loan license/job work arrangement by the company, mention the name of the third party and location of the factory, where the product has been produced/ manufactured. (14) If there is any foreign technical collaboration for the product under reference, the following details shall be given: ( a ) name and address of the foreign collaborators; ( b ) main terms of agreement; ( c ) amount of royalty, lump sum payment, technical aid fee payable and the basis of calculating the same; ( d ) whether the technical collaborator has contributed to the share capital. If so, the paid up share capital so held. (15) If the company is engaged in other activities besides the manufacture of the product under reference, the following details in respect of each such product or activity shall be given: ( a ) list of the products or activities; ( b ) list of the products or activities for which Cost Accounting Records Rules have been prescribed under section 209(1)( d ) of the Act; ( c ) whether Cost Audit Order has been issued by the Government in respect of any of the products or activities. If so, number and date of the order. (16) A printed copy of the Annual Report, containing audited Profit and Loss Account, Balance Sheet and Auditor's Report in respect of the company's financial year for which the report is rendered, shall be enclosed with the Cost Audit Report. 2. Cost accounting system (1) Briefly describe the cost accounting system existing in the company, keeping in view the requirements of the Cost Accounting Records Rules applicable to the class of companies manufacturing the product under reference and also its adequacy or otherwise to determine correctly the cost of production, cost of sales, sales realisation and margin of the product under reference. (2) Briefly specify the changes, if any, made in the costing system; basis of inventory valuation; method of overhead allocation; apportionment to cost centres/ departments and final absorption to the product under reference, etc., during the current financial year as compared to the previous financial year. 3. Process of manufacture A brief note regarding the process of manufacture along with flow chart covering production, utility and service department of the product. 4. Quantitative details Particulars Current Year 1 st Previous Year 2 nd Previous Year 1. Installed capacity* 2. Capacity enhanced during the year by leasing arrangement, etc. 3. Total available capacity 4. Production during the year: ( a ) self-manufactured ( b ) third party on job work, etc. ( c ) loan license basis 5. Total production quantity 6. Production as per Excise Records 7. Capacity utilisation percentage 8. Opening stock (finished quantity) 9. Total available quantity 10. Quantity captively consumed 11. Quantity sold: ( a ) domestic at controlled price ( b ) domestic at market price ( c ) export under advance license ( d ) export under other obligation ( e ) export at market price ( f ) total 12. Closing stock (finished quantity) Notes . 1. It should be clarified whether the installed capacity is on single shift or multiple shift basis. 2. In order to have a meaningful comparisons of production and installed capacity, wherever necessary these details should also be expressed in appropriate units, e.g. standard hours or equipment/plant/vessel occupancy hours crushing hours spindle/loom shifts, equivalent production, production in terms of standard hours, etc. 5(A). Major input materials/components consumed Particulars Current year Two Previous Years Separately Qty Rate Amount Qty Rate Amount 1. Indigenous: ( a ) (specify) ( b ) ( c ) 2. Self manufactured: ( a ) (specify) ( b ) ( c ) 3. Imported: ( a ) (specify) ( b ) ( c ) 4. Total Note . Details should be furnished in respect of major input materials each constituting at least 2% of the total raw material cost. 5 (B). Standard/Actual consumption of input materials per unit Particulars Unit Standard Actuals Current Year 1st Previous Year 2nd Previous Year 1. (specify) 2. 3. Note . Details should be furnished in respect of major input materials each constituting at least 2% of the total raw material cost for each major type/variety/size, etc. of product under reference. 6. Break-up of cost of input materials imported during the year Particulars Current Year 1st Previous Year 2nd Previous Year 1. FOB Price in foreign currency/rupees 2. Insurance and freight 3. Customs duty 4. Clearing charges 5. Inland freight 6. Other expenses 7. Total Note . Details should be furnished in respect of major input materials each constituting at least 2% of the total material cost. 7(1). Power, fuel and utilities Particulars Current year Two Previous Years Separately Qty Rate Amount Qty Rate Amount 1. Indigenous (purchased): ( a ) (specify) ( b ) ( c ) 2. Self generated/produced: ( a ) (specify) ( b ) ( c ) 3. Imported: ( a ) (specify) ( b ) ( c ) 4. Total Note . Details should be furnished in respect of major items each constituting at least 2% of the total material cost. 7(B). Standard/Actual consumption of power, fuel and utilities in terms of quantity per unit of production Particulars Unit Standard Actuals Current Year 1st Previous Year 2nd Previous Year 1. (specify) 2. 3. Note . Details should be furnished in respect of each major type/variety/size, etc. of product under reference. 8. Salaries and wages Particulars Current Year 1st Previous Year 2nd Previous Year A. Quantitative Details: 1. Direct Workers: ( a ) Average number during the year ( b ) Man-days available ( c ) Man-days actually worked for: ( i ) own production ( ii ) job work ( d ) Reason-wise analysis of idle man-days [( a ) - ( b )] ( i ) absenteeism ( ii ) shortage of raw materials ( iii ) power shortage/failures ( iv ) Others (specify) 2. Indirect Workers: ( a ) Average number during the year ( b ) Man-days available ( c ) Mandays actually worked for: ( i ) own production ( ii ) job work ( d ) Reason-wise analysis of idle man-days [( a ) - ( b )] ( i ) absenteeism ( ii ) shortage of raw materials ( iii ) power shortage/failures ( iv ) others (specify) B. Cost Detail 1. Direct labour cost on production 2. Indirect employee costs on production 3. Employee costs on administration 4. Employee costs on selling and distribution 5. Other employees costs, if any (specify) 6. Total employee costs 7a. Payments under any VRS 7b. Amount provided during the year 9. Repairs and maintenance Particulars Current Year 1st Previous Year 2nd Previous Year 1. Land and Building 2. Plant and machinery 3. Staff quarters and colony 4. Others (to be specified asset category-wise) 5. Total amount 6. Amount capitalised/deferred during the year 7. Net amount (5 - 6) 8. Deferred amount of earlier years, if any 9. Total amount provided in the cost records (7 + 8) 10. Fixed assets register and depreciation Particulars Current Year 1st Previous Year 2nd Previous Year 1. Whether fixed assets register maintained cost centre-wise 2. Method of providing depreciation 3. Amount of depreciation under section 205(2) of the Companies Act, 1956 or any other relevant Act, as the case may be 4. Amount of depreciation provided in the financial records 5. Amount of depreciation absorbed in the cost records* 6. Shortfall/Excess, if any (3 and 5) Note . * The impact of re-valuation of assets, if any, shall not be included. 11. Gross Block, Depreciation and Lease Rent Particulars Gross Black Depreciation Lease Rent paid if any Total ( b + c ) 1st Previous Year 2nd Previous Year a b c d Name of major cost centres/products ( a ) (specify) ( b ) Total Note . Excluding gross block of assets given on lease, if any. 12. Overheads Particulars Current year Two Previous Years Separately for the product under reference for factory as a whole for the product under reference for factory as a whole 1. Factory Overheads ( a ) (specify) ( b ) 2. Administration OHs ( a ) (specify) ( b ) 3. Selling Overheads ( a ) (specify) ( b ) 4. Distribution OHs ( a ) (specify) ( b ) Note . The break-up under each head should be furnished in respect of major items constituting at least 80% of the overhead cost under each head. 13. Research and development expenses Particulars Current Year 1st Previous Year 2nd Previous Year 1. Process development and improvement 2. Existing product development 3. New product development 4. Others, if any 5. Total amount 6. Amount capitalised/deferred during the year 7. Net amount (5 - 6) 8. Deferred amount of earlier years, if any 9. Total amount provided in the cost records (7 + 8) 10. Amount paid to related parties 14. Royalty and technical know-how charges Particulars Current Year 1st Previous Year 2nd Previous Year 1. Royalty on production/Sales 2. Lump sum payment of royalty, if any 3. Technical know-how charges 4. Others, if any 5. Total amount 6. Amount capitalised/deferred during the year 7. Net amount (5 - 6) 8. Deferred amount of earlier years, if any 9. Amount provided in the financial accounts (7 + 8) 10. Amount absorbed in the cost records 11. Shortfall/Excess, if any 12. Amount paid to related parties Note . The details should be furnished in respect of each agreement separately. 15. Quality control expenses Particulars Current Year 1st Previous Year 2nd Previous Year 1. ISO number, if any 2. Name of certifying agency 3. Salaries and Wages 4. Other direct expenses 5. Others, if any (specify) 6. Total amount 16. Pollution control expenses Particulars Current Year 1st Previous Year 2nd Previous Year 1. Effluent treatment 2. Control of air pollution 3. Control of ash pound/ash mound 4. Penalty, if any 5. Others, if any 6. Total amount 17. Abnormal non-recurring costs Particulars Current Year 1st Previous Year 2nd Previous Year 1. (specify) 2. 3. Total 18.(A) Non-moving Stock (at the end of the year) Particulars Current Year 1st Previous Year 2nd Previous Year a1. Total direct material consumption a2. Closing stock of direct material a3. Value of non-moving stock a4. Percentage of a3 to a2 b1. Total indirect material consumption b2. Closing stock of indirect material b3. Value of non-moving stock b4. Percentage of b3 to b2 c1. Work-in-progress c2. Closing stock c3. Value of non-moving stock c4. Percentage of c3 to c2 d1. Finished Goods d2. Closing stock d3. Value of non-moving stock d4. Percentage of d3 to d2 e1. Total: e2. Closing stock e3. Value of non-moving stock e4. Percentage of e3 to e2 18. (B) Written off stock (during the year) Particulars Current Year 1st Previous Year 2nd Previous Year 1.Direct Materials (Raw Material and Components, etc) 2. Indirect Materials 3. WIP 4. Finished Goods 5. Total 19. (A) Inventory valuation (at the end of the year) Particulars Basis of valuation Current year Previous Years Quantity (unit) Rate (Rs.) Amount (Rs.) Quantity (unit) Rate (Rs.) Amount (Rs.) 1. Input materials: ( i ) Purchased Indigenous Imported ( ii ) Self manufactured 2. Chemicals, additives and consumables 3. Stores and spares 4. Packing materials 5. Tools and implements and Jigs, Dies and Fixtures 6. Work-in-progress: ( i ) material cost ( ii ) conversion cost (details to be given) 7. Finished goods: ( i ) unpacked ( ii ) packed 8. Scrap/wastage 9. Others, if any 10. Total value of inventory as per cost accounts 11. Total value as per financial accounts 12. Reasons for major differences, if any Notes . (1) In respect of item at Sr. Nos. 1 and 6 details be furnished in respect of each major input material constituting at least 2% of the total material cost. (2) In respect of items at Sr. Nos. 2 to 5, total amount be given without any quantitative details. (3) Give in brief the method of inventory valuation system indicating the elements of cost included therein and the extent thereof. (4) Capital work-in-progress to be shown separately. 19. (B) Physical verification of inventory Sl. No. Particulars Periodicity of verification Shortage Value (Rs.) Excess Value (Rs.) Net (Rs.) 1. Raw material 2 Chemicals, additives, consumables, etc. 3. Stores and Spares 4. Packing Materials 5. Tools and Implements 6. WIP 7. Finished Goods 8. Scrap, Wastage 9. Total 20. Sales of the product under reference Particulars Current year Two Previous Years Qty Rate Amount Qty Rate Amount 1. Purchased goods: ( a ) (specify) ( b ) ( c ) 2. Loan license basis: ( a ) (specify) ( b ) ( c ) 3. Own manufactured: ( a ) (specify) ( b ) ( c ) 4. Total sales Notes . (1) Above details shall be furnished for major product groups/varieties. (2) Separate details shall be furnished for indigenous sales and export sales. 21. Margin per unit of output Particulars Current year* Two Previous Years Separately Cost of sales Sales realisation Margin (Rs.) Cost of sales Sales realisation Margin (Rs.) 1. Purchased goods: ( a ) (specify) ( b ) ( c ) 2. Loan license basis: ( a ) (specify) ( b ) ( c ) 3. Own manufactured: ( a ) (specify) ( b ) ( c ) Notes . (1) Above details shall be furnished for major product groups/varieties. (2) Separate details shall be furnished for margin on indigenous sales and export sales. Where the product (such as sugar, bulk drugs, formulations, etc.) is sold at different prices in accordance with government policy, sales realisation and margin on such product at different prices shall be shown separately alongwith quantity and value. 22. Competitive margin against imports Particulars Current Year 1st Previous Year 2nd Previous Year 1. Name of product 2. Estimated demand of the product in the country* 3. Total production in the country* 4. Quantities imported in the country** 5. Total production by the company 6. % age share of the company in total inland production (item 5/item 3) 7. ( a ) Cost of production per Unit (Inland sale) ( b ) Cost of Sale per Unit (Inland sale) ( c ) Cost of production per Unit (Export sale) ( d ) Cost of Sale per Unit (Export sale) 8. Quantity of the product imported by the company** 9. FOB value of quantity imported by the company** 10. Weighted average FOB rate for quantities imported by the company (item 9/item 8)** 11. FOB value of quantity imported in the country** 12. Weighted average FOB rate of quantities imported in the country (item 11/item 4)** 13. Competitive margin [Item 12 less item 7(A)]** 14. Major exporting countries (other than those listed in item 4 above) 15.(A) Total import duty paid by the company (net of CENVAT) (B) Weighted average rate of import duty paid by the company (net of CENVAT) (item 15(A)/item 8) 16. Bound rate of duty under WTO agreement. Notes . (1) *Indicate the source of information. (2) ** Country-wise details should be furnished in respect of major countries covering at least 80% of the total and balance should be shown under the head "Others". 23. Value addition and distribution of earnings Particulars Current Year 1st Previous Year 2nd Previous Year A. Value Addition (for the product under reference): 1. Gross sales (excluding returns) 2. Less : Excise duty, etc. 3. Net sales 4. Adjustments in stocks 5. Less : Cost of bought out materials and services 6. Value added 7. Add : Income from any other sources 8. Earnings for distribution B. Distribution of earnings to: 1. Employees as salaries and wages, retirement benefits, etc. 2. Shareholders as dividend 3. Retained funds as depreciation, etc. 4. Government as taxes (specify) 5. Others, if any (specify) 6. Total 24. Financial position and ratio analysis Particulars Current year* Two Previous Years Separately Product under reference Factory as a whole Company as a whole Product under reference Factory as a whole Company as a whole 1. 2. 3. 4. 5. Capital employed Net Worth Profit Net Sales Operating expenses as a percentage of Net Sales: ( a ) Material cost ( b ) Factory overheads ( c ) Royalty on production, if any ( d ) Salaries and wages ( e ) Research and development expenses ( f ) Quality control ( g ) Administrative overheads ( h ) Selling and distribution ( i ) Interest 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Profit as %age of capital employed Profit as %age of net worth Profits as %age of net sales Profit as %age of value addition Value addition as a %age of Net Sales Current assets to current liabilities Net working capital in terms of number of months of cost of sales excl. depreciation Debt-equity ratio Raw materials stock in terms of number of months of consumption Stores and spares stock in terms of number of months of consumption Work-in-progress stock in terms of number of months of cost of production Finished goods stock in terms of number of months of cost of sales. Notes . (1) Figures given for the company as a whole against serial numbers 1, 2, 3 and 4 shall be duly reconciled with the financial accounts of the company. (2) The figures given for the product against serial numbers 1, 2, 4 and 5 shall be duly reconciled with the cost accounts of the company. (3) Figures given for the factory as a whole against serial numbers 1, 3 and 4 shall be duly reconciled with the financial accounts of the company. 25. Capitalisation of revenue expenditure Particulars Current Year 1st Previous Year 2nd Previous Year 1. Raw Materials: ( a ) Purchased Indigenous Imported ( b ) Self manufactured 2. Direct wages and salaries 3. Consumable stores 4. Repairs and maintenance 5. Depreciation 6. Factory overheads 7. Administration overheads 8. Other expenses (specify) 9. Total 10. Capitalisation Excisable value 11. Capitalisation Non-excisable value 26. Related party transactions Briefly describe the transfer pricing policy, followed by the company in respect of "related party relationship" as defined in the relevant cost accounting records rules made under clause ( d ) of sub-section (1) of section 209 of the Act. The following particulars may be furnished with regard to related party transactions. Particulars of related party Product/activity Quantity Rate Amount Normal Price 1. 2. 3. 4. etc. Note . Details should be furnished for sale and purchase transactions separately. 27. Central Excise reconciliation for the product under Reference Particulars Chapter Heading Chapter Heading Chapter Heading A. 1. 2. 3. 4. Quantitative Details: Opening Stock Add: Production Less: Closing Stock Total Sales/Clearances Unit Unit Unit Particulars Assessable Value (Rs.) Rate of Duty Amount of Duty (Rs.) B. 1. 2. 3. 4. 5. Details of Clearances Total Clearances (Chapter heading-wise Less: Duty Free Clearances (factory) Excisable Clearances (factory) Penalty/Fine/Interest payable if any Total Duty Payable (total 3 4) Particulars Assessable Value (Rs.) Rate of Duty Amount of Duty (Rs.) C. 1. 2. 3. 4. 5. 6. 7. 8. Summary of Cenvat Credit Opening Balance Add: Availed during the year Add: Refunds received during the year Less: Closing Balance as per Excise Records Total Cenvat credit utilised during the year (1 + 2 + 3 - 4) Closing Balance as per Annual Accounts Difference between 4 - 6 (State amount and reasons for Difference) Particulars Amount (Rs.) D. 1. 2. 3. 4. 5. 6. 7. Reconciliation of Duty paid Excise Duty payment as per 'B' Total Excise Duty paid through (a) Cenvat Account - (Inputs) (b) Cenvat Account - (Capital Goods) (c) PLA Total (a + b + c) Difference between (1 - 2) (State amount and reasons for difference) Excise Duty as per RT - 12 Difference between (2 - 5) (State amount and reasons for difference) Particulars Amount (Rs.) E. 1. 2. 3. 4. F. 1. 2. 3. 4. Reconciliation of Duty paid and recovered: Excise Duty paid as per P L A/c Excise Duty Recovered as per P L A/c Difference between duty paid and recovered (State amount and reasons for difference) Reconciliation of Turnover Turnover as per RT 12 Turnover as per Annual Accounts (Net off Duties Taxes) Difference between (1 - 2) (State amount and reasons for difference) 28. Profit Reconciliation Particulars Current Year 1st Previous Year 2nd Previous Year 1. Profit or Loss as per cost accounting records 2. Add : Incomes not considered in cost accounts: ( a ) (specify) ( b ) ( c ) 3. Less : Expenses not considered in cost accounts: ( a ) (specify) ( b ) ( c ) 4. Add : Over-valuation of closing stock in financial accounts 5. Add : Under-valuation of opening stock in financial accounts 6. Less : Under-valuation of closing stock in financial accounts 7. Less : Over-valuation of opening stock in financial accounts 8. Adjustment for others, if any (specify) 9. Profit or Loss as per financial accounts Explanation . For the purpose of these rules: ( a ) "Capital Employed" means average of fixed assets at net book values (excluding intangible assets effect of revaluation of fixed assets, capital works-in-progress) and current assets minus current liabilities and provisions existing at the beginning and close of the financial year. ( b ) "Net Worth" means share capital plus reserves and surplus (excluding revaluation reserve) less accumulated losses and intangible assets. ( c ) "Profit" means operating profit after providing for depreciation and all other expenses except interest on borrowings including debentures but before providing for taxes on income. ( d ) "Net Sales" means sales excluding sales returns excise duties, sales tax, octroi, other local taxes and expenses refundable/recoverable from buyers/customers. ( e ) "Value Addition" means the difference between the net output value (net sales adjusted for work-in-progress and finished goods stock) and cost of bought out materials and services for the product under reference. ( f ) "Non-Moving Stocks" means value of raw materials and components finished and semi-finished which have not moved for more than twelve months. The period shall be twenty-four months in case of consumable stores and spare used in workshop, tool rooms or repairs and maintenance. ( g ) "Normal Price" means price charged for comparable and similar products in the ordinary course of trade and commerce where the price charged is the sole consideration of sale and such sale is not made to a related party. Notes . (1) If there is any change in the share capital due to merger, acquisition, buy back of shares, bonus issue, etc. during the year under reporting, special mention may be made with the reasons therefor. (2) The profit arrived at for the factory, company and the product shall not include interest and dividend received on investments outside the business, capital gains, and any other income which is neither normal nor of recurring nature. The profit so arrived shall be the normal operating profit earned during the current financial period of the company. (3) Wherever, there is any significant variation in the current year's figure over the previous year's figure, reasons thereof shall be given. (4) If the company has more than one factory producing the product under reference, separate details shall be indicated in the prescribed annexures in respect of each factory. (5) If the factory is engaged in the production of the product under reference and any other activities, separate details shall be indicated in the prescribed annexure for the factory as a whole and for the product under reference. (6) Figures shall be given for the year under audit and for the two preceding years in respect of paragraphs 4 to 26. Signature Signature Signature Name Name Name Cost Auditor Company Secretary Director Seal Stamp Stamp Date Date Date Proforma Name of the company: Name and address of the factory: Name of the product: Statement showing the cost of production, cost of sales, sales realisation and margin in respect of the product(s) under reference produced during the year/period: A. Quantitative Information Sr. No. Particulars (unit of measurement to be specified) Current Year Previous Year 1. 2. 3. 4. 5. 6. 7. ( i ) Installed capacity ( ii ) Capacity enhanced during the year by leasing arrangement, etc. Actual production/output ( i ) Self ( ii ) third parties, if any, Production as percentage of installed capacity Captive consumption, if any Quantity sold ( a ) Domestic ( b ) Export Closing Stock (finished goods) Opening Stock (finished goods) B. Cost Information Sr. No. Particulars Quantity unit Rate per unit Amount Cost per unit (Rs.) (Rs.) Current year (Rs.) Previous year (Rs.) 1. Material consumed: (item-wise covering at least 80% of items by value) 1. Purchased ( a ) Indigenous (specify) ( b ) Imported (specify) 2. Self-manufactured (specify) 2. Process chemicals (specify) 3. Utilities 1. Purchased ( a ) Indigenous (specify) ( b ) Imported (specify) 2. Self manufactured (specify) 4. Direct wages and salaries 5. Consumable stores and spares 6. Depreciation 7. Lease rent, if any 8. Repairs and maintenance: ( a ) Building ( b ) Plant and Machinery ( c ) Others, if any 9. Other works overhead 10. Total Works Overhead (2 to 9) 11.Royalty, if any 12. Technical assistance/ know-how fee 13. Research and development 14. Quality control 15. Administrative overhead (relating to production activities) ( a ) Salaries and wages ( b ) Others (specify) ( c ) Total ( a + b ) 16. Total (1 + 10 to 15) 17. Adjustment for variances (where standard costing system is followed) 18. Add : Opening Stock Less : Closing Stock (Work-in-progress) 19. Less : Credits (from wastage and by-products)/Recoveries, if any 20. Packing cost Primary ( a ) Materials ( b ) Others ( c ) Total 21. Cost of production (16 to 20) 22. Finished Goods purchased, if any 23. Opening Stock Closing Stock (finished products) 24. Total (21 + 22 + 23) 25. Quantity and cost transferred for: ( i ) Captive consumption, if any ( ii ) Sales ( iii ) Others, if any 26. Packing cost Secondary ( a ) Materials ( b ) Others ( c ) Total 27. Other expenses ( a ) Administrative overheads (others) ( b ) Others (specify) 28. Selling and distribution expenses ( a ) Salaries and wages ( b ) Freight and transport charges ( c ) Commission to selling agents ( d ) Advertisement expenses ( e ) Royalty on sales, if any ( f ) Warranty expenses after adjusting income from chargeable services ( g ) Others ( h ) Total ( a to g ) 29. Interest and finance charges: ( a ) For manufacturing activity ( b ) Others ( c ) Total 30. Total cost of sales (excluding excise duty) of packed quantity sold (24 to 29) 31. Sales realisation Less : Excise duty and other statutory levies 32. Net sales realisation 33.Margin (32 - 30) 34. Add : Export benefits and incentives, if any 35. Total margin (including export benefits) 36. Ex-factory price (excluding sales tax, etc.) 37. Maximum retail price (excluding sales tax, etc.) 38. Maximum retail price, if any, prescribed by the Government/ statutory/regulatory body, etc. Notes. 1. Separate proforma shall be prepared for each type/variety/description of product(s) under reference. 2. Separate proforma shall be prepared for the quantity used for captive consumption, quantity, sold within the country and the quantity exported. Expenses incurred on export and the incentive earned thereon shall be indicated in the proforma applicable for the quantity produced and exported. 3. Separate proforma shall be prepared for any related party/inter-unit transfer of intermediate/finished product(s) under reference. 4. The administrative overheads shall be included in the cost of production only to the extent they contribute in putting the goods produced to their present location and condition. The balance of administrative overheads, if any, shall be included in the cost of goods sold. The proforma may be amended accordingly, if required. 5. The proforma may be suitably modified to cover the special features, if any, of the product under reference on the basis of proforma prescribed for working out cost of sales, margin, etc. of the said product in the relevant Cost Accounting Records Rules. 6. Indicate whether the prices of the product under reference are ex-factory prices, F.O.R. prices, door delivery prices or any other terms. In the case of ex-factory prices, whether cost of dispatch packing materials, freight insurance and delivery charges are recoverable from the customers separately. Signature Signature Signature Name Name Name Cost Auditor Company Secretary Director Seal Stamp Stamp Date Date Date ---------------------------------- Notes:- [1] Heading substituted by The Cost Audit (Report) (Amendment) Rules, 2006, w.e.f. 8-3-2006.