New Audit rules limit scope, Cost Accountants threaten Action

Print Posted Date : 03-Jul-2014 , 08:14:14 am | Posted By CASANSAAR

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The latest government notification on cost audit rules has dealt a body blow to the cost and management accountants' profession by severely restricting its scope, something the professionals were trying hard to avoid for the past one year. What's worse is the fear that this will leave many professionals redundant has prompted the Institute's elected members to even consider a mass resignation.

"The overall mood is to resign en masse and let the ministry of corporate affairs manage the institute," said Amit Apte, member of the Central Council of the Institute of Cost Accountants of India (ICAI), before heading to Delhi for an emergency meeting. "There was no consultation with ICAI when the ministry came out with the draft rules in November 2013. Since then, there were thousands of suggestions and presentations made to them, but they were disregarded. The final rules published on Monday are no different from the draft ones. We cannot continue to function under such circumstances," he said. Other council members ET spoke to reiterated the same sentiment.

Suresh Chandra Mohanty, president of the ICAI, acknowledged that a number of members are planning to resign. "The institute has formally requested a meeting with the new minister of corporate affairs Arun Jaitley, possibly tonight, to apprise him of the issue. After that meeting, we will take a call on the ffurther course of ac tion," he told ET.

The final rules on cost audit that the ministry of corporate affairs announced on Monday kept the high threshold of `. 500 crore in turnover or net worth as proposed at the draft stage, while keeping several important industries such as textiles, automobiles, engineering and electronics out of the audit mechanism. Removal of several industries and a high threshold have caused a vast majority of companies -as high as 96% by some estimates -to move out of the cost audit system.
Resignations have started trickling in. Manas Thakur, a central council member, tendered his resignation taking moral responsibility of the council's failure to secure justice for the CMA profession. Similarly, Rakesh Bhalla, chairman of North India Regional Council, resigned in protest. "Other members of the council are also planning to submit their resignation. They are waiting for the outcome of the central council meeting," he added.

The new rules propose to bring three services -construction, hospital and education -under the cost audit's ambit for the sake of transparency and to keep a tab on cost. "However, this is misleading. Most of the hospitals and education institutes in the country operate as trusts, while construction projects are typically undertaken in joint ventures or SPVs, which are all out of the purview of the Companies Act," pointed out Sanjay Bhargave, central council member of ICAI. "And even if there are some companies in these sec . 500-crore threshold will tors, the ` exempt most of them," he added. (Economic Times)

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