In a move that is expected to bring cheers on the faces of Cost Accountants, the Ministry of Corporate Affairs (MCA) has accepted the recommendations sent by ICWAI to discontinue the existing system of ordering Cost Audits on a company to company basis in the same Industry.
The Ministry of Corporate Affairs vide Notification no. dated 2nd May 2011 has issued Mandatory Cost Audit orders on All Companies engaged in:-
- Bulk Drugs
- Formulations
- Fertilizers
- Sugar
- Industrial Alcohol
- Electricity
- Petroleum
- Telecommunication
Companies operating in any of the above Industries and falling in the Criteria specified below shall mandatorily get their Cost Audits done if during the immediate previous financial year: -
- Aggregate value of Net Worth exceeds 5 Crores or
- Aggregate value of Turnover exceeds 20 Crores or
- Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India
On the same lines, the Ministry issued another notification on 3rd May 2011 mandating compulsory Cost Audits for All Companies engaged in: -
- Cement
- Tyres and Tubes
- Steel Plant
- Steel Tubes and Pipes
- Paper or Insecticides
Companies operating in any of the above Industries are required to get their Cost Audits done only if during the immediate previous financial year: -
- Aggregate Value of Turnover exceeds 100 Crore
- Company’s Equity or Debt Securities are Listed or are in the process of Getting Listed whether in India or outside India
The companies falling under the above categories will be required to get cost audit conducted u/s 233B of the Companies Act 1956 by a cost accountant in practice or a firm of cost accountants for each of the financial year commencing from April 1, 2011.
The Ministry of Corporate Affairs has also announced New Norms for Appointment of Cost Auditor vide General Circular Number 15/2011 dated April 11, 2011.
New Norms for Appointment of Cost Auditor
The MCA, vide its General Circular number 15/2011 dated April 11, 2011, has also amended the procedure of appointment of Cost Auditor. The New Procedure is: -
- The Company required to get its Cost Records Audited shall appoint a Cost Auditor who is a Cost Accountant as per the Cost and Works Accountant Act 1959 and who holds a valid Certificate of Practice (CoP)
- The Audit Committee of a Company as the first point of reference for appointment of cost auditor to be made by the Board of Directors.
- The Audit Committee shall ensure that the Cost Auditor is free from any disqualifications as specified in the Companies Act 1956.
- The Audit Committee shall obtain a certificate from the Cost Auditor certifying his Independence and Arms Length relation with the Company.
- The Company shall file its application with the Central Govt on www.mca.gov.in portal, in the prescribed form 23C within 90 days from the date of commencement of each financial year along with the prescribed fees and other prescribed Documents.
- On filing the application, the same shall be deemed to be approved by the Central Govt, unless contrary is heard within 30 days from the date of filing such application.
- After the expiry of 30 days, the Company shall issue formal letter of appointment to the Cost Auditor.
- Within 30 days of receipt of Formal Letter of Appointment from the Company, the Cost Auditor shall inform the Central Govt in the prescribed form, along with a copy of such appointment.
The above new norms for appointment of Cost Auditor shall be applicable from the financial year commencing on or after 1st April 2011.
{ 18 comments }
I realed like the new amendedment of MCA & Its very good news for all the professional that means all practicing ICWAI
@ N.Y.Gupta Students Of ICWAI Final Stage @
VERY HAPPY TO KNOW THE NEW AMENDEMENT OF MCA .THANKS A LOT & CONGRATULATION TO ALL MY CMA BROTHERS . WE WILL TAKE OUR PROFESSION AT HIGH LEVEL BY PROVIDING COST & MANAGEMENT SERVICES EFFICIENTLY & EFFECTIVELY.
BEST OF LUCK
this is really a good news, but need some more amendments….. and I.Tax audit is also came under the area of cost accountants…… by doing this there is a healthy competition is come in the line of TAX audit between cost and CA’s.
Best of Luck.
i like this information that use of my future job related instructions thanking you
IT IS VERY PLESE TO KNOW THAT
IT IS NOW COMPULSORY FOR ALL THE COMPANIES
TO APPIONT COST ACCOUNTANT MANDATORILY
AS PER MY OPNION TURNOVER SHOULD BE
20 CR.NOT FOR EIGHT CLASS OF COMPANY BUT
FOR ALL CMPANY ENGAGED IN MANUFACTURING ACTIVITY
A little bit of good news which generates little hopes to the ICWAI professionals. Government only opened its peer eyes to the profession and to the society also. Society is also denied from knowing the reality of their exploitation since i don’t know the profit margin on cost of production of my consumables. in that case govt also loosing the public exchequers by not knowing exact amount of Tax (both Direct and Indirect). this is being continued over last 50 years. do we feel where are we living. But funny things are that govt knows this art of sucking public money. why? Industries don’t want the applicability of cost accounting. and this industries promote mps and mlas.
This is a good beginning by the present president of ICWAI. Hats off to you. By increasing the fees of Cost Audit as per turnover limit will encourage more number of cost accountants to come to the practice field. As more number of cost accountants serving in the different organisations are being harassed by not getting promotions or appointments since some of the top management professionals are chartered accountants & they are inclined to give promotions to their counterparts i.e chartered accountants as well recruiting candidates from only chartered institutes. I hope you will take up this issue with appropriate authorities for greater benefits of cost accountants.
Can any one give some tips me in starting own practice as cost audit.
join in partnership with existing or upcoming members in practice.
Hey i also wanted to have my own firm can you please tell if you have taken few steps in that directions or not…..
I hv also started my own practice in Delhi. Steps to start your own practice are given in website of the institute.
THIS NEW AMENDMENT OF MCA WILL INCREASE THE SCOPE OF PRACTICING COST ACCOUNTANT’S.
name change of the institute is mandatory . otherwise institute can not compete globally .institute has no mou with canada and australia cma institutes . also it has only 6 overceas chapters which must be increased .
I was not recommending the students to do ICWAI although I was a student of ICWAI and completed Intermediate. Now I will strongly reccomend and will encourage my son to get admission in to ICWAI.
this is indeed a good move by MCA.
Also, certain clarifications have further been issued on 30th Nov.
The compliance like this will bring good descipline & will help bringing more & more transparency in Business processes.
whether Tax audit can do by the Cost Accountant. If not then it needs be incorporated to abolish single participition of any one professional body.
3 CHEERS…..GREAT MOVE…NOW WHO SO EVER DOUBTS THE SCOPE OF CWA NEEDS TO GET HIMSELF DOUBLE CHECKED…….
IT IS A VERY GOOD DECISION FROM MCA. THE NEW STUDENTS NOW ENCOURGED MORE TO GET A ADMISSION IN CWA. NOW MORE PEOPLE FAMILIER WITH THESE, BECAUSE TILL NOW APPROX… 50% PEOPLE DONT KNOW ABOUT ICWA. SO IT IS A VERY GOOD STEP TAKEN BY MCA. GOOD WORK AND GOOD LUCK.