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Offline TechShristi

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Step brotherly treatment by ICIA to ICWAI
« on: December 11, 2013, 01:32:20 PM »
Institute of  Chartered Accountants adopts step brotherly treatment to  its professional brother – Institute of  Cost Accountants of  India by  CMA Amit Apte, CCM Institute of Cost Accountants of India in WIRC newsltter Bulletine 2013

 The Draft rules on Cost Audit were released by the MCA on  21st November 2013.  These were  instantaneously proclaimed as  “Black Rules”  by many. No doubt these Draft rules are  a cause of concern not only to the Cost & Management Accountants, but   to  the Consumers, Investors, Financial Institutions, revenue authorities and public  at large. The Draft Rules however did succeed in getting the entire Cost  Accounting fraternity  to stand united and work towards ensuring that these Draft rules do not materialise.
 There have been   allegations that  the   Institute of Chartered Accountants of India has  a role to play in the recent draft  rules  on Cost  Audit issued  by  the government. The  draft rules if implemented will virtually restrict the  role  of Cost  Audit only  to certain government companies and  a  very  few  companies in private sector.
I refer to an article published in the  Economic Times in August 14th issue that Government was likely  to rethink compulsory Cost  Audit. In the  same article, Subodh Kumar Agrawal, President of Institute of Chartered Accountants of India had  remarked “that the  cost audit order of Nov 2012  increases the  burden on the  part of companies in covering and  conducting cost of audit of so many activities.” He  had further added that many companies are  not  comfortable with sharing the  cost information through cost  audit report to a third party due to fear of data theft. Mr. Agarwal was however silent on these issues as far  as  the  Financial and  Tax  audits being  conducted by members of his own Institute.
In fact apparently the Institute of Chartered Accountants (ICAI) has been  objecting to every  move of the Government in favour of Cost Accountants. Here are  a few instances.
1.   Formation of the Institute
Way  back  in 1959  when the  Institute of Cost  & Works Accountants of India was enacted under a Statute of the Parliament, the ICAI,  in its  representation had  stated that “there is no such profession existing in India or in any  other part of the  world.  Cost Accounting is only  a specialised branch of Accountancy. The Institute of Cost &  Works Accountants in  the   United  Kingdom, the
National Association of Cost Accountants (now called the National Association of Accountants), the  Society   of Industrial and  Cost Accountants of Canada and  similar institutions all over  the  world are  only Associations or Societies dealing with this  particular branch  of Accountancy, by a mere enactment, a profession which does not actually exist, cannot therefore be brought into existence”. The ICAI in this representation further stated that “With   his  expert knowledge of  accounts and intensive practical training  in  various kinds  of undertakings, the   Chartered  Accountant is  quite competent to  perform Cost  Accounting work”.  The Government of India however recognised the  need  to have a  separate Institution that specialises in  Cost Accountancy and  thus the  Institute of Cost  & Works Accountants of India was  formally enacted under a Statute of the Parliament in 1959.
2.   Cost Audit – introduction of  concept in 1965
Further  when Government introduced the  concept of “Cost Audit”; The Institute of Chartered Accountants of India (ICAI) lodged a protest before the select committee against  Companies (Amendment) Bill,  1964 that introduced the  concept of statutory cost  audit by cost accountants. During debate on the amendment bill, Shri N. Dandekar, M.P. aChartered Accountant himself had also strongly opposed the introduction of Cost Audit. He had stated that provision on Cost audit if introduced would be “detrimental to the  best  interests of the companies and  ought not to be passed”.
3.   Name Change of  the ICWAI
Another instance of unnecessary intervention by ICAI in  matters not   relating to  their  profession was demonstrated  when the  matter of name change was discussed. The Institute of Cost & Works Accountants of India wanted the  name of the  Institute to be changed to Institute of Cost & Management Accountants of India in lines with their counterparts and  associate professional groups  at the international  level.  The  ICAI  while opposing the  proposal for change of name of ICWAI  to ICMAI,    submitted  in   their  written memorandum that “Management Accounting is  one  such  area which is common to  all  (i.e.  ICAI, ICSI  & ICWAI) and  is not exclusive to any  of the  three professions. It is a position in an organization and  not  a  function or  discipline. It cannot be chartered or regulated through a legislation like  a public  accounting function. The  members of one Institute cannot be  allowed to  use  the designation of Management Accountants”.In fact  when asked by the standing  Committee on  Finance to  respond to  this representation by the  ICAI,  the  Ministry stated that “….There are  several countries such  as  Canada, USA, UK, Bangladesh, Pakistan  and   Sri  Lanka where the dual model   of accounting institutes exists. In none  of these countries confusion has   been  created by  the existence of two titles and  both  CMAs and  CAs co-exist in  harmony  rendering  service to the   society.   The objections of ICAI to name change do not seem  to carry conviction”. However the  standing committee, stated in  its  report that “while  the  Committee had, on  an  earlier occasion in   2004,   favoured  the   change  in   the   name  of  the Institute and  the designation attached to the profession, which  has now  been  proposed in  the  Bill   (re-terming the   Institute  and re-designating  the   profession  as cost   and  management accountants)  on  the   basis  of the  submissions made by  the Ministry, the  vehement opposition expressed by  the   ICAI  to  the proposal in particular, who also detailed the implications thereof has prompted a detailed rethink on the  matter”. Thus the then ICWAI  was denied to  be  Institute of  Cost  & Management Accountants of India.
4.   South Asian Federation of Accountants (SAFA)
The ICAI did not restrict this step brotherly treatment given  to ICWAI  only  in  India. It is a documented fact that in 2002 when it was  the  turn of the  then ICWAI  to nominate its Vice President on South Asian Federation of Accountants (SAFA) in line with the rotation policy of SAFA, the ICAI virtually bulldozed the government and ensured that this did not  happen and  thus instead of a representative of ICWAI, A representative from Institute of Chartered Accountants of India was nominated as VP of SAFA in 2002 and  further took charge as President in 2003.  Thus the  Institute of Chartered Accountants snatched away the coveted presidentship from its younger brother, the then Institute of Cost & Works Accountants of India.
5.   Expert Group constituted  by  Ministry of Corporate Affairs
On  matter of Cost  Audit, the  MCA had  constituted an Expert Groupto enable development of relevant cost accounting methodologies and standards  to   increase the competitiveness of the  Indian manufacturing sector and   to  advise the   Government on  suitable measures for the same, Government of India, Ministry of Corporate Affairs in 2008.  It were  the  findings of this group that are  the backbone of the  various notifications of MCA issued in 2011 and 2012 on Cost Records and Cost Audit. Even at that time “dissent note”  was given  only by the representative of ICAI, Shri Vinod Jain which stated that “there is  no  need  to  amend and  apply these rules to all classes   of companies. The  provisions of CARRs should be  applicable to  those organizations only where there is a question of subsidy, anti-dumping, administered prices, requirements  of Regulatory Bodies or  in  such industries  where in    view    of   public    interest the Government consider it  appropriate  to prescribe compulsory maintenance  of cost  accounts”. He  further argued that “there should not  be  any   legal   mandate on  the  applicability of Cost Accounting Record/Report Rules (CARRs)  i.e., on the  maintenance and   the   Cost Audit  rather   the    Companies   should   be   educated properly about the importance of costing system so that they voluntarily adopt the  same for  improving internal efficiency of  the  management. The burden of compliance audit should not  jeopardize the  day-to-day managementfunction. The  management should be  left free  to concentrate more  on  operational aspects rather than on  compliance formalities”. Mr.   Jain  had    further  recommended that  “the appointment of Cost auditor should be made by Board of Directors without seeking prior approval from  the Central Government. It is not  necessary that the Cost Auditor should be  appointed in  Annual General Body meeting  of shareholders”.
It is noteworthy to observe that the draft rules on Cost Audit issued by MCA on 21st November 2013 are  on the lines of these recommendations of the  representative of ICAI,  in the  Expert Group rather  than the recommendations of the  entire Expert group.
From all  the  above,  the  underlying premise seems the
‘perceived superiority’  of Chartered Accountants as custodians of the entire accounting world, of which, they thought, cost  accounting formed a  small  part. The recurring  motif in   all   the    representations  of   the ICAI  is harped on the same tune, not  understanding that the  world  had  changed very dynamically beyond the  cocoon   of  traditional  accounting. It is high  time that we Cost  & Management Accountants come  out  of the shadow of our big brother and  establish our self as a preferred professional.

Source:  WIRC Newsletter Bullentine

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Step brotherly treatment by ICIA to ICWAI
« on: December 11, 2013, 01:32:20 PM »

Offline Mr. Patel

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Re: Step brotherly treatment by ICIA to ICWAI
« Reply #1 on: December 11, 2013, 04:12:22 PM »
I think now time has come that we take this matter to the top authority.The protest against Cost Audit draft should end here, it should be continue to the time we are allowed as a accountants in the Direct tax code along with other professional bodies.

Offline kkmixs

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Re: Step brotherly treatment by ICIA to ICWAI
« Reply #2 on: December 11, 2013, 04:14:04 PM »
Ground Reality of the ICAI....Yes the all the thing written in the article is true.I m not able to understand what is the benefits of this???

Come on.Friends comment your views over here...To comment out here in this threads you do not have to get reisgter.This is humble request from me (moderator) to all CMA students to comment your views over here and share this all..Sharing is at the bottom of the page.

So what do think about this guys???
« Last Edit: December 11, 2013, 04:20:06 PM by kkmixs »

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Re: Step brotherly treatment by ICIA to ICWAI
« Reply #2 on: December 11, 2013, 04:14:04 PM »

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