Accountants express concern over new cost audit rules

Flagging concerns that the new rules would "severely affect" their profession, cost accountants' apex body ICAI has asked the government to bring more segments including automobiles, packaged food as well as plantation products under the cost audit ambit.
The revised cost audit rules, as part of new companies law, were notified by Corporate Affairs Ministry on June 30.
"The coverage of industries does not have a clear logic and it will lead to major confusion as to what products are covered and what are not covered...," the Institute of Cost Accountants of India (ICAI) has written to Corporate Affairs Minister Arun Jaitley, seeking modification in the rules.

"The changes made in the new Rules will severely affect the profession, its members and students totalling to around 6,00,000, the stakeholders and the Indian economy at large," ICAI President Suresh Chandra Mohanty said in the letter dated July 1, a day after the changed norms were notified.
Requesting changes in the rules to safeguard the interest of the Indian economy, ICAI has said its suggestions have not been taken into consideration.
According to ICAI, machinery, mechanical appliances and parts, electrical/electronic machinery equipment, automobile and auto ancillary segments included in Central Excise Tariff Act need to be covered under the rules.

It has also demanded inclusion of businesses related to packaged food products, edible oil seeds and oils (including vanaspati), plantation products such as tea, coffee, rubber and related articles including tyres & tubes.

Further, ICAI has asked the government to bring paper, paperboard and articles, glass and glassware segments under cost audit rules.
The new norms would be applicable broadly to four classes of companies including those engaged in the production of goods in strategic sectors such as machinery and mechanical appliances used in defence.
Entities engaged in an industry regulated by a sectoral regulator or a central ministry would also be covered. Besides, companies operating in areas involving public interest such as railways and firms that are into production, import and supply or trading of certain medical devices would have to maintain cost records.

Unfortunately the Companies (Cost Records and Audit) Rules, 2014 have failed to consider any of the suggestions. It seems that thousands of the suggestions given by public at large by the due date December 14, 2013 have also been ignored, the letter said.
Referring to the latest rules, ICAI said that "provisions for maintenance of cost account records and cost audit to fulfil the objectives of improving public distribution system, health care system, infrastructure, transforming Indian industry into a globally competitive manufacturing hub and encouraging SSIs has not been addressed".