The recent enactment of Companies Act, 2013 and specifically Section-135 dealing with the corporate social responsibility aspect of the industry has bring forth another issue of cost accounting/management vis-à-vis CSR. Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year has to spend at least two percent of the average net profits it made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy under law.
The vexed issue of which activities are to be counted under the head of CSR and which not has been settled now. Schedule VII of this Section lists all the broad items which can constitute the area of CSR intervention. Now it’s under the purview of the companies’ CSR board to analyze, identify different areas of intervention, location, timeline and allocate budget to these projects accordingly. Thus, it is imperative that the board pick projects after careful research and analysis after studying them from a multi-dimensional view and allocate costs optimally.