Corporate Governance and Audit in India - BS

04 June 2008 |


The article is published in Business Standard June 02, 2008 by Ashish Bhattacharya



"Cost audit, which has not received due attention has the potential to support enterprise governance. In fact investors should insist for cost audit. In India cost audit exists for over four decades. But, it has not been used to its full potential. Till date, only 44 industries/products have been covered by Cost Accounting Record Rules, and cost audit orders have been issued in about 2,500 cases, covering about 2,000 companies.

In the era of price control and administered interventions, attested cost structure had a major role to play and hence the cost audit emphasised on this aspect. The cost audit had to play the key role of verifying and validating the cost figures in select industries before they were submitted to the government.



In the changed economic environment the emphasis should shift to efficiency review. The Ministry of Corporate Affairs has constituted an Expert Group to review the existing Cost Accounting Standards and Cost Audit Report Rules. Hopefully the cost audit in its new avatar will be effective in supporting the enterprise governance.

Some argue that cost audit has become irrelevant in a market economy. They are not correct. It is true that government control is unwarranted in a market economy. But, in a market economy, regulators are required to frame right regulations in the interest of the industry as a whole and also in the interest of the consumers.

Cost audit, supported by cost accounting standards, can provide relevant and credible cost and revenue data to regulators to support their decisions. Moreover, cost audit can provide relevant reports to the board of directors to strengthen its oversight function. Therefore, in a market economy, cost audit with changed emphasis on efficiency is as relevant as it was in a controlled economy.

In an environment where ‘stakeholder theory' of corporate governance is still rhetoric and management focus is on capital market, cost audit will help to protect the interest of stakeholders including investors. It will also help optimal use of national resources"

Find out more on Business Today on article written by Ashish Bhattacharya

Cheers,

Santosh Puthran

Add to Technorati Favorites

Do you like to be updated in Accountancy ?

Subscribe to Management Accountant by Email


Or

Subscribe in a reader


SAP Store, UK


Visit MA Stores ? You will find something you are looking for ....

Management Accountant Store, US - Powered by Amazon
Management Aaccountant Store, UK Stores - Powered by Amazon, UK


You may also like to read
  1. Accountancy Profession in India 22-May-08
  2. Cost Audit Awareness in India 21-Jan-07
  3. Membership of Accounting Body - Value Proposition 20-Mar-08
  4. Tax Cut - A simple lesson in Economics - 25-Dec-07
  5. Understanding three stages of Change
  6. Management Accounting Guidelines of CMA Canada
  7. Activity Based Costing
  8. Full Cost Accounting
  9. Do Markets have a DNA
  10. Home
Subscribe to RSS Feeds and be up-to-date
  1. Management Accountant
  2. Accountancy News
  3. My Favorite Blogs that I track
  4. SAP Jobs & Opportunities

If you like this post, please tweet this or share this for the benefit of other readers.

0 comments:

Find out how you can promote yourself
Subscribe to MA updates Get the Latest via Email or RSS
  1. Management Accountant
  2. Accountancy News
  3. My Favorite Blogs that I track
  4. SAP Jobs & Opportunities

Enter your email address:

Delivered by FeedBurner