Draft Companies (Cost Record and Cost Audit) Rules, 2013

[Maruti Bhogulkar]

Refer : 

1) Draft Rules (6th phase) under Companies Act 2013

2) Press Release 23-11-2013

Draft Rules relating to Cost Accounting Records and Cost Audit under the new Companies Act, 2013 makes Cost Accounting and the profession almost irrelevant. Instead of highlighting and supporting the role of Cost & Management Accounting in supporting and developing Indian Industries to grow globally competitive entities, MCA has undermined the importance of the profession and put a retrograde step. In this era of globalization, business entities face stiff competition from all over the world. The need of the day is to provide a mechanism which supports and guide them to make optimum utilization of available resources, control and reduce cost of production of goods and services, make proper assessment of projects before and after implementation, increase the worth of the entities and shareholders wealth. Given the choice the business entities do not welcome any kind of audit, be it audit of financial accounts, direct and indirect taxes, etc. To achieve excellence and supremacy and ensure compliance with the best standards in the world, some statutory compulsions are a must. Audit of Financial Accounts is a must to ascertain the operating result and state of affairs on a periodical basis, but the whole exercise is only a post-mortem of what has happened. It does not provide any direction; it only says what the fact is. There is no torch bearing mechanism for the future, nor the financial accounting audit say what the results should have been. Now provision of goods and services at the price expected by the customers is of significance, as the business can not expect to sell their goods and services at the price they want and make profit they expect. If the MCA gives in to the pressure from any quarter, then new legislation will be anti-national as it is bad in the long-term interest of the country. By relaxing the Cost Accounting Records & Cost Audit requirements the government may be doing well to some corporate entities in the short-run, but indeed it is doing harm to the nation and the industries in the long-run. There is a greater need today than ever before to implement Cost & Management Accounting System in all entities, irrespective of their constitution, size and nature of the industry they belong to. Cost Accounting Records Rules introduced in 2011 was really a welcome and progressive step, but now the MCA is planning to put many step backward and thereby undermine the importance of an important segment of accounting system. Indian industries need to improve their capabilities in terms of Cost-Management, Competitive pricing, asset management and utilization, growth rate and so-on, they face challenge from all quarters of the world. The country also needs to search for resources inside the country, reduce imports, and increase exports. In the recent years Indian Rupee has depreciated against all major currencies due to increased demand for foreign exchange and increased import-export gap. The government must look back and go with new legislation in the interest of the country and not relax in the interest of a few individuals or group of individuals. Instead of repealing the earlier Rules, the MCA should have proposed to cover more industries and sectors and taken initiatives to make the Cost Accounting System more useful and effective.

 We are looking forward for your suggestion, guidance and support, so that we can work for the betterment of the Industry and Country.