Issue of Cost Audit Order

Issue of Cost Audit Order:-


Issue of Cost Audit Order is the fi rst step in Cost Audit of any company. The Central Government
issues a specifi c order under Section 233(B)(1) of the Companies Act, 1956 on a particular company
directing it to get its cost records audited by a practicing Cost Accountant indicating the product
for which the order is issued and the period for which it is ordered. Therefore, the starting point
for the cost audit exercise is the receipt of cost audit order by the company, specifying the year and
the product for which such cost audit is to be conducted. However, the Cost Audit Branch has now
been issuing Cost Audit Orders on regular basis to all the companies covered (i.e. every fi nancial
year thereafter continuously until further orders.) This amounts to saying that once an order is
issued, the cost audit is required to be done every year unless it is specifi cally withdrawn.

It may be clarifi ed here that since the cost audit order issued by the Cost Audit Branch specifi es
the product, the Company need not have a cost audit for the product not specifi ed in that order.
Thus, if the company producing Sugar, Cement and Steel receives an order relating to Sugar for the
year ending 31st March, 2009, then it need not get the cost records for products Cement and Steel
audited under Sec. 233B for the year ending 31st March, 2009. Similarly for subsequent years also,
it needs to get its cost records for Sugar only cost audited unless it gets a specifi c order on other
products also.