Appointment of firm as Cost Auditor:-
The rules provide that a person appointed as cost auditor should be a member of the Institute of
Cost and Works Accountants of India and should also hold a certificate of practice. The term “cost
auditor” refers to both, i.e., individual cost accountant as well as the firm of cost accountants also.
The Ministry of Corporate Affairs has specifically clarified (Appendix II-A) that the question of
appointment of cost auditors in fi rm’s name for conduct of cost audit has been under examination in
the department and it has been decided to approve the appointment of cost auditors in firm’s name
under sub-Section (2) of Section 233-B of the Companies Act, 1956 if such a proposal is received
from the Board of Directors of any company subject to the following conditions:
(a) “All the partners of the firm are practicing cost accountants within the meaning of Sections 6
and 7 of the Cost and Works Accountants Act, 1959,” and
(b) “The firm itself has been constituted with the previous approval of the Central Government/
Institute as required under Regulation 113 of the Cost and Works Accountants Act, 1959 as
amended from time to time.”
The Government have also clarified (Appendix II-B) that in case a firm of cost accountants is
appointed as cost auditors, authentication of the cost audit report is to be done by the signature of
any one of the partners of the fi rm in his own hand for and on behalf of the firm. The report should
not be signed by merely affixing firm name.
In the case of firms appointed as cost auditors, each partner of the firm who is not in full time
employment can hold appointment as cost auditor of the specified number of companies i.e. twenty
companies for each such partner who is not in full time employment elsewhere. However, not more
than ten such companies should have a paid up share capital of Rs. 25 lakhs or more.
The rules provide that a person appointed as cost auditor should be a member of the Institute of
Cost and Works Accountants of India and should also hold a certificate of practice. The term “cost
auditor” refers to both, i.e., individual cost accountant as well as the firm of cost accountants also.
The Ministry of Corporate Affairs has specifically clarified (Appendix II-A) that the question of
appointment of cost auditors in fi rm’s name for conduct of cost audit has been under examination in
the department and it has been decided to approve the appointment of cost auditors in firm’s name
under sub-Section (2) of Section 233-B of the Companies Act, 1956 if such a proposal is received
from the Board of Directors of any company subject to the following conditions:
(a) “All the partners of the firm are practicing cost accountants within the meaning of Sections 6
and 7 of the Cost and Works Accountants Act, 1959,” and
(b) “The firm itself has been constituted with the previous approval of the Central Government/
Institute as required under Regulation 113 of the Cost and Works Accountants Act, 1959 as
amended from time to time.”
The Government have also clarified (Appendix II-B) that in case a firm of cost accountants is
appointed as cost auditors, authentication of the cost audit report is to be done by the signature of
any one of the partners of the fi rm in his own hand for and on behalf of the firm. The report should
not be signed by merely affixing firm name.
In the case of firms appointed as cost auditors, each partner of the firm who is not in full time
employment can hold appointment as cost auditor of the specified number of companies i.e. twenty
companies for each such partner who is not in full time employment elsewhere. However, not more
than ten such companies should have a paid up share capital of Rs. 25 lakhs or more.
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