Skip to main content

Corporate social responsibility and Role of Cost accounting record rules and cost audit report rules.

AIMS of CSR:

• Control Risk Management.
• Improve stakeholder relations & operational impacts.
• Comply Integrated EMS, Social and Productivity Management system.
• Compliance through supply-chain .
• Work out the relationships between business drivers and CSR dimensions.
• Improve strengths and weaknesses of organizational expertise.
• Estimate costs of improving CSR.
• Priorities your initiatives in the light of these factors.
• Publicize your intentions in mission and/or value statements.
• Adopt a Ethical Code.

AIMS of COST Audit:(rule 2 c rule 4 G.S.R. 924(E).-sub-section (4) of section 233B,read with subsection
(1) of section 227 and clause (b) of sub-section (1) of section 642, of the Companies Act, 1956 (1 of 1956),

Based on my/our examination of the records of the company subject to aforesaid qualifications, if any,
I/We give my/our observations and suggestions on the following

(a) the adequacy or otherwise of the cost accounting system including inventory valuation in vogue in the company and suggestions for the improvement thereof. The Cost auditor shall also indicate the persistent deficiencies in the system, pointed out in earlier reports but not rectified;


(b) the adequacy or otherwise of the budgetary control system, if any, in vogue in the company;


(c) matters which appear to him to be clearly wrong in principle or apparently unjustifiable;


(d) cases, where price charged for related party transactions as defined in the respective Cost Accounting
Records Rules is different from normal price, impact of such lower/higher price on margin of the product under reference shall be specified;


(e) areas where the company is incurring losses or where there is considerable decline in profitability, the cost auditor should comment on the reasons thereof including indicative break-even point. The cost auditor shall also comment on the default, if any on the payments due to the Government, financial institutions and
banks, penal interest levied thereon and its impact on the cost of sales and profitability;


(f) steps required to strengthen the company under the competitive environment especially with regard to need for protection from cheaper imports, if any;


(g) export commitments of the company vis-à-vis actual exports for the year under review.

Also comment on
comparative profitability and pricing policy of the company for domestic and export sales. Give impact of exports benefits/ incentives offered by the Government on export profitability;


(h) the scope and performance of internal audit of cost records, if any, and comment on its adequacy or otherwise.


4. The Cost Auditor shall suggest measures for making further improvements in the performance in respect of cost control and cost reduction.

Blog Contributed by RV

2 comments

Popular posts from this blog

Throughput Accounting

Throughput accounting (TA) is an alternative to cost accounting proposed by Eliyahu M. Goldratt. It is not based on Standard Costing or Activity Based Costing (ABC). Throughput Accounting is not costing and it does not allocate costs to products and services. It can be viewed as business intelligence for profit maximization. Conceptually throughput accounting seeks to increase the velocity at which products move through an organization by eliminiating bottlenecks within the organization.


Cost (or Management) accounting is an organization's internal method used to measure efficiency. Since no one outside the organization uses such internal accounts for investment or other decisions, any methods that an organization finds helpful can be used.


Throughput accounting improves profit performance with better management decisions by using measurements that more closely reflect the effect of decisions on three critical monetary variables (throughput, inventory, and operating expense — defin…

Learning Curve Theory

Learning Curve Theory is concerned with the idea that when a new job, process or activity commences for the first time it is likely that the workforce involved will not achieve maximum efficiency immediately. Repetition of the task is likely to make the people more confident and knowledgeable and will eventually result in a more efficient and rapid operation. Eventually the learning process will stop after continually repeating the job. As a consequence the time to complete a task will initially decline and then stabilise once efficient working is achieved. The cumulative average time per unit is assumed to decrease by a constant percentage every time that output doubles. Cumulative average time refers to the average time per unit for all units produced so far, from and including the first one made.

Major areas within management accounting where learning curve theory is likely to have consequences and suggest potential limitations of this theory.


Areas of consequence:
A Standard Costing

Resistence to Change - Approaches of Kotter and Schlesinger

The Six (6) Change Approaches of Kotter and Schlesinger is a model to prevent, decrease or minimize resistance to change in organizations.
According to Kotter and Schlesinger (1979), there are four reasons that certain people are resisting change: Parochial self-interest (some people are concerned with the implication of the change for themselves ad how it may effect their own interests, rather than considering the effects for the success of the business)Misunderstanding(communication problems; inadequate information)Low tolerance to change (certain people are very keen on security and stability in their work)Different assessments of the situation (some employees may disagree on the reasons for the change and on the advantages and disadvantages of the change process) Kotter and Schlesinger set out the following six (6) change approaches to deal with this resistance to change: Education and Communication - Where there is a lack…