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This is with reference to the editorial, `At no cost' (Business Line, August 8). Your conception that ICWAI's demand for compulsory cost audit is out of context in the liberalised era is not based on the full understanding of the implications of cost audit.

The changed circumstances India Inc is facing more than justifies the continuation of the cost audit mechanism. The revised Cost Audit Rules and the format of new Cost Audit Report re-position the approach to the objective of performance improvement and effective utilisation of resources. To this end the Institute has also been requesting the Government to make available the abridged form of Cost Audit Report to shareholders as a part of the annual report.

Some of the major relevant changes relevant to our profession have been: Transparency in presenting the financial information to stakeholders; Segmental Reporting; and the valuation of inventory. But a major weakness in the current disclosure requirement is the absence of the certification of both the above points by a relevant professional and, in this case, by the cost auditor. In most industries, the same company has two sets of valuation of inventory — as per financial accounts and cost accounting records rules.

The same dichotomy exists even in Segmental Reporting.

We have been requesting the Government to avoid this dual mode and accept the valuation of inventory and segmental profit, as per the cost records for the purpose of financial accounts also. The valuation of inventory and segmental profit computation in industries where cost records have been mandated are as per the cost accounting standards set by the Institute and they are an authenticated ready source of information. Therefore, the cost audit mechanism, instead of losing relevance, has gained more by making it a tool for authenticating key information for the company stakeholders.

The revised curriculum of the ICWAI, and approved by the Government, equip the cost accountant with full financial accounting and taxation knowledge. Since we are talking of competition in every discipline, it is but fair to include the cost accountant in the definition of "Accountant" under the Income-Tax Act. Unless there is statutory recognition, success and sustenance of cost accountants in practice is not possible. Therefore the request to the Government for automatic cost audit for specified industries and appointment of cost auditor on a par with statutory auditor in the annual general meeting of a company.

B. V. Ramana Murty

President, ICWAI,

Kolkata

Kolkata

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