The Threshold Re-Test
The cost audit applicability under Section 148 depends on the overall turnover and the turnover of covered products or services. A scheme can change both. The transferee must recompute the turnover on a combined basis and determine whether the merged entity crosses the ₹35 crore records threshold and the ₹50 crore or ₹100 crore audit thresholds, depending on the sector.
The Appointment and Filing
If the merged entity is covered, the board must appoint a cost auditor, and the appointment must be filed with the ROC in Form CRA-2. The cost auditor’s report is filed in CRA-3, and the company files CRA-4. The scheme should provide for the appointment timeline so that the cost audit for the first post-merger year is not delayed.
The Records Transition
The transferor’s cost records for the pre-merger period remain relevant for the cost audit of that period. The transferee should obtain the transferor’s cost records and ensure that the cost auditor has access to them. A gap in the records can lead to a qualified cost audit report.
Call to Action: For post-scheme cost audit applicability assessment, CRA-2 filing, or records transition, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.