Cost audit should be included in Clause 49: MCA committee

A government-appointed committee has suggested expanding the ambit of Clause 49 on listing of companies specified by market regulator SEBI to include cost audit report.

"It (Clause 49) must be duly amended to focus and to conform to the cost audit structure so that companies report on the efficiency performance in more detail and to the benefit of the stakeholders in evaluating the company," the latest report of experts on cost audit standards said.

Clause 49 of the Listing Agreement, which is signed between companies and stock exchanges, deals with various aspects of corporate governance.

The Corporate Affairs Ministry-appointed committee, which has representation from the ICWAI, ICAI, ICSI, CII, Ficci, Assocham, PHDCCI, SEBI, academicians and management consultants among others -- is of the view that cost audit can provide reliable and credible cost and revenue data to regulators to support decisions.

"An appropriate cost management system is required in all business units to remain competitive and the Government should ensure through a legal framework that companies do install such a cost management system in their respective governance," it said.