New Delhi, August 13, 2017

The Corporate Affairs Ministry has come out with a draft of the proposed amendments to the Cost Records and Audit Rules

The government will amend the cost audit rules under the companies law in order to ensure parity between financial and cost records.

The amendments have been mooted pursuant to implementation of the Indian Accounting Standards (Ind-AS), which converges with global accounting norms.

The Corporate Affairs Ministry, which is implementing the Companies Act, has come out with a draft of the proposed amendments to the Cost Records and Audit Rules.

Various existing provisions under these rules, including some relating to intangible assets, will be done away with, while Ind-AS compliance will be required for certain other aspects. “Pursuant to implementation of Ind-AS, the Companies (Cost Records and Audit) Rules, 2014 are to be amended to bring parity between financial records and cost records,” the ministry said in a communication.

Ind-AS is applicable for certain class companies from the current financial year (2017-18).

With respect to employee cost, the ministry has proposed that the same should be ascertained after taking into consideration “the cost of retirement benefits charged in the financial statements in an accounting period“.

Under the current rules, employee cost shall be ascertained taking into account the gross pay, including all allowances payable, along with the cost to the employer of all the benefits.

In case of companies where Ind-AS is applicable, any re-measurement of employee costs “recognised in other comprehensive income shall not form part of the employee cost,”as per the draft rules.

[The Hindu Business Line]