Cost Accounting Standards (CAS) – Complete Guide on Applicability, Threshold Limits & Industry Coverage

Cost Accounting Standards (CAS) are issued by the Institute of Cost Accountants of India (ICMAI) to bring uniformity, consistency, and transparency in cost accounting practices. These standards are primarily relevant for companies required to maintain cost records and undergo cost audit under the Companies Act, 2013.

🎯 Purpose of Cost Accounting Standards

• Ensure uniform cost accounting principles
• Standardize methods of cost determination
• Improve reliability and comparability of cost data
• Prevent manipulation in product/service costing
• Facilitate statutory cost audit
• Support regulatory authorities in pricing and tariff decisions
• Assist management in budgeting and cost control

📘 Legal Framework Governing CAS Applicability

Cost Accounting Standards become operationally relevant when a company is covered under:

• Section 148 of the Companies Act, 2013
• Companies (Cost Records and Audit) Rules, 2014

📊 Threshold Limits – Cost Records & Cost Audit

1️⃣ Maintenance of Cost Records

Cost records are required if:

• The company is engaged in notified sectors (manufacturing or specified services), AND
• Overall turnover from all products/services ≥ ₹35 Crores during the preceding financial year

2️⃣ Applicability of Cost Audit

Cost Audit becomes mandatory if:

For Regulated Sectors:

• Overall turnover ≥ ₹50 Crores, AND
• Turnover from regulated product/service ≥ ₹25 Crores

For Non-Regulated Sectors:

• Overall turnover ≥ ₹100 Crores, AND
• Turnover from specific product/service ≥ ₹35 Crores

🏭 Industries Where CAS is Applicable

🔹 Regulated Sectors

• Telecommunications
• Electricity Generation & Distribution
• Petroleum Products
• Fertilizers
• Sugar
• Drugs & Pharmaceuticals

🔹 Non-Regulated Manufacturing Sectors

• Cement
• Steel
• Automobile & Auto Components
• Engineering Goods
• Chemicals
• Textile
• Paper
• Food Processing
• Aluminium & Non-Ferrous Metals

🔹 Specified Service Sectors

• Telecommunication Services
• Electricity
• Transportation (as notified)

🚫 Industries Generally Not Applicable

CAS is generally not applicable to:

• Banking Companies
• Insurance Companies
• NBFCs
• Pure Trading Companies
• Companies below threshold limits
• Entities not covered under Cost Records Rules

📋 Complete List of Cost Accounting Standards (CAS)

• CAS-1 – Classification of Cost
• CAS-2 – Capacity Determination
• CAS-3 – Overheads
• CAS-4 – Cost of Production for Captive Consumption
• CAS-6 – Material Cost
• CAS-7 – Employee Cost
• CAS-8 – Cost of Utilities
• CAS-9 – Packing Material Cost
• CAS-10 – Direct Expenses
• CAS-11 – Administrative Overheads
• CAS-12 – Repairs & Maintenance
• CAS-13 – Cost of Service Cost Centre
• CAS-14 – Pollution Control Cost
• CAS-15 – Selling & Distribution Overheads
• CAS-16 – Depreciation & Amortisation
• CAS-17 – Interest & Financing Charges
• CAS-18 – Research & Development Cost
• CAS-19 – Joint Costs
• CAS-20 – Royalty & Technical Know-how Fee
• CAS-21 – Quality Control Cost
• CAS-22 – Manufacturing Cost
• CAS-23 – Overburden Removal Cost

📈 Practical Applicability Example

Example:

• Total Turnover: ₹120 Crores
• Turnover from Cement division: ₹40 Crores

Result:

• Cost Records → Applicable
• Cost Audit → Applicable (Non-Regulated Sector criteria satisfied)

🧾 Key Compliance Requirements

• Maintenance of product-wise cost sheets
• Reconciliation between financial and cost records
• Filing of Cost Audit Report (Form CRA-4)
• Appointment of Cost Auditor (Form CRA-2)

💡 Conclusion

Cost Accounting Standards ensure structured and transparent cost reporting. Applicability depends on industry classification and turnover thresholds. Companies crossing prescribed limits in notified sectors must maintain cost records and may require statutory cost audit.

CAS compliance is mandatory once sector coverage and turnover criteria are triggered under the Companies Act, 2013.