Internal Audit of Stock Brokers

Training programme for internal audit of stock brokers



Training Programme for Internal Audit of Stock Brokers

Background

Periodical audit is one of the tools to ascertain the level of compliance among stock brokers of the exchanges. The scope of audit should cover the existence, scope and efficiency of the internal control system, compliance with the provisions of the SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, SEBI (Stock brokers and Sub- brokers) Regulations, 1992, circulars issued by SEBI, agreements, KYC requirements, Bye-Laws of the Exchanges, data security and insurance in respect of the operations of the stock brokers/clearing members.

SEBI has issued circulars asking stock exchanges to direct stockbrokers/trading members/clearing members to carry out complete internal audit on a half yearly basis by chartered accountants, company secretaries or cost and management accountants who are in practice and who do not have any conflict of interest.

The programme

This executive education programme is offered by NISM, in co-ordination with BSE & NSE, for chartered accountants, cost accountants and company secretaries. It aims at helping them carry out effective internal audit of the broker’s books in order to satisfy the requirements of SEBI and the exchanges. The sessions discuss audit procedure and areas that the auditor should examine with references to what books, documents and data are to be checked. Programme faculty has been drawn from SEBI and the two main exchanges. Duration of the programme would be two days.

Offerings

There will be six programmes in Mumbai and two programmes each in Kolkata, New Delhi and Chennai. The dates for the six Mumbai offerings are given below. The dates of the other metro cities are yet to be finalized.

1. January 9&10, 2009 4. January 30&31, 2009
2. January 16&17, 2009 5. February 6&7, 2009
3. January 23&24, 2009 6. February 13&14, 2009

Programme fee

The programme fees would be Rs.2,250/- (for both days; inclusive of service tax) per participant. The programme fee covers courseware, lunch and tea for both days. A participant certificate will be given to all the participants.

Registration

For registration and other details kindly contact:

Cost Audit to services-Extended by CBEC in the finance bill

Excise audits uptill now applicable to manufacturing unit has been extended to Services under the Service Tax.

To Act As Company Secretary.

Companies (Appointment and Qualifications of Secretary) Rules, 1988
In exercise of the powers conferred by clauses (a) and (b) of section 642 read with clause
(45) of section 2 and section 383A of the Companies Act, 1956 (1 of 1956), and in
supersession of the Companies (Secretary's Qualifications) Rules, 1975, the Central
Government hereby makes the following Rules, namely :
1. Short title and commencement -
(1) These rules may be called the Companies (Appointment and Qualifications of
Secretary) Rules, 1988.
(2) It shall come into force on the 1st day of December, 1988.
2. Appointment, etc., of whole-time secretary -
(1) Every company having a paid-up share capital of not less than rupees fifty lakhs
shall have a whole-time secretary.
(2) No person shall be appointed as whole-time secretary under sub-rule (1) unless
he is a member of the Institute of Company Secretaries of India constituted under the
Company Secretaries Act, 1980 (56 of 1980).
(3) A company having a paid-up share capital of less than rupees fifty lakhs may
appoint any individual as its whole-time secretary to perform the duties of a
secretary under the Companies Act, 1956, and any other ministerial or administrative
duties :
Provided that no individual shall be eligible to be so appointed unless he possesses one or
more of the qualifications specified in sub-rule (4).
(4) No individual shall be appointed as secretary pursuant to sub-rule (3) unless he
possesses any one or more of the following qualifications, namely :-
(i) membership of the Institute of Company Secretaries of India constituted
under the Company Secretaries Act, 1980 (56 of 1980) ;
(ii) pass in the Intermediate examination conducted either by the Institute of
Company Secretaries of India constituted under the Company Secretaries Act,
1980 (No. 56 of 1980), or by the earlier Institute of Company Secretaries of
India incorporated on 4th October, 1968, under the Companies Act, 1956 (1 of
1956), and licensed under section 25 of that Act ;
(iii) Post-graduate degree in commerce or corporate secretary ship granted by
any university in India ;
(iv) degree in law granted by any university ;
(v) membership of the Institute of Chartered Accountants of India constituted
under the Chartered Accountants Act, 1949 (38 of 1949) ;
(vi) membership of the Institute of Cost and Works Accountants of India
constituted under the Cost and Works Accountants Act, 1959 (23 of 1959) ;
(vii) post-graduate degree or diploma in management sciences, granted by any
university, or the Institutes of Management, Ahmedabad, Calcutta, Bangalore
or Lucknow ;
(viii) post-graduate diploma in company secretary ship granted by the Institute
of Commercial Practice under the Delhi Administration or Diploma in
Corporate Laws and Management granted by the Indian Law Institute, New
Delhi ;
(ix) post-graduate diploma in company law and secretarial practice granted by
the University of Udaipur; or
(x) membership of the Association of Secretaries and Managers, Calcutta,
registered under the West Bengal Registration of Societies Act, 1961 (XXVI of
1961) :
Provided that where the paid-up share capital of such company is increased to rupees
twenty-five lakhs or more, the company shall, within a period of one year from the date
of such increase, comply with the provisions of sub-rules (1) and (2) of rule 2.
Explanation - In this rule, "University" has the meaning assigned to it in the University
Grants Commission Act, 1956 (No. 3 of 1956), and includes any university outside India
which is recognised by the Union Public Service Commission for the purposes of
recruitment to public services and posts in connection with the affairs of the Union or of
any State.
3. Provisions relating to existing secretaries -
Notwithstanding contained in sub-rules (1) and (2) of rule 2, the qualifications
possessed by a person holding the office of whole-time secretary of a company
immediately before 30th October, 1980, in terms of the second proviso to clause (a)
of rule 2 of the Companies (Secretaries Qualifications) Rules, 1975, shall be
deemed to be the qualifications which he shall be required to possess in order to be
eligible to continue as whole-time secretary in that company.

Legal Representatives for Appelate tribunal

Right to legal representations

22C. The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers or present his or its case before the Securities Appellate Tribunal.

Explanation. - For the purposes of this section, -

1. "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
2. "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
3. "cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;
4. "legal practitioner" means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.40

Valuation in Banks RBI

RBI No.2006-2007/224
DBOD.BP.BC No. 50 / 21.04.018/ 2006-07
January 4, 2007
The Chairmen/Chief Executives
All Commercial Banks
(excluding RRBs)
Dear Sir,
Valuation of Properties - Empanelment of Valuers
It has been observed that different banks follow different policies
for valuation of properties and appointment of valuers for the
purpose. The issue of correct and realistic valuation of fixed assets
owned by banks and that accepted by them as collateral for a sizable
portion of their advances portfolio assumes significance in view of
its implications for correct measurement of capital adequacy position
of banks. In this context, there is a need for putting in place a
system/procedure for realistic valuation of fixed assets and also for
empanelment of valuers for the purpose.
2. Banks may be guided by the following aspects while formulating a
policy on valuation of properties and appointment of valuers:
(a) Policy for valuation of properties
i) Banks should have a Board approved policy in place for valuation of
properties including collaterals accepted for their exposures.
ii) The valuation should be done by professionally qualified
independent valuers i.e. the valuer should not have a direct or
indirect interest.
iii) The banks should obtain minimum two Independent Valuation Reports
for properties valued at Rs.50 crore or above.
(b) Revaluation of bank’s own properties
In addition to the above, the banks may keep the following aspects in
view while formulating policy for revaluation of their own properties.
i) The extant guidelines on Capital Adequacy permit banks to include
revaluation reserves at a discount of 55% as a part of Tier II
Capital. In view of this, it is necessary that revaluation reserves
represent true appreciation in the market value of the properties and
banks have in place a comprehensive policy for revaluation of fixed
assets owned by them. Such a policy should interalia cover procedure
for identification of assets for revaluation, maintenance of separate
set of records for such assets, the frequency of revaluation,
depreciation policy for such assets, policy for sale of such revalued
assets etc. The policy should also cover the disclosure required to be
made in the 'Notes on Account' regarding the details of revaluation
such as the original cost of the fixed assets subject to revaluation
and accounting treatment for appreciation / depreciation etc.
ii) As the revaluation should reflect the change in the fair value of
the fixed asset, the frequency of revaluation should be determined
based on the observed volatility in the prices of the assets in the
past. Further, any change in the method of depreciation should reflect
the change in the expected pattern of consumption of the future
economic benefits of the assets. The banks should adhere to these
principles meticulously while changing the frequency of
revaluation/method of depreciation for a particular class of asset and
should make proper disclosures in this regard.
(c) Policy for Empanelment of Independent valuers
i) Banks should have a procedure for empanelment of professional
valuers and maintain a register of 'approved list of valuers'.
ii) Banks may prescribe a minimum qualification for empanelment of
valuers. Different qualifications may be prescribed for different
classes of assets (e.g. land and building, plant and machinery,
agricultural land, etc.). While prescribing the qualification, banks
may take into consideration the qualifications prescribed under
Section 34AB (Rule 8A) of the Wealth Tax Act, 1957.
3. Banks may also be guided by the relevant Accounting Standard issued
by the Institute of Chartered Accountants of India.
Registration of valuers.
34AB. (1) The 32[Chief Commissioner or Director General] shall
maintain a register to be called the Register of Valuers in which
shall be entered the names and addresses of persons registered under
sub-section (2) as valuers.
(2) Any person who possesses the qualifications prescribed33 in this
behalf may apply to the 34[Chief Commissioner or Director General] in
the prescribed form35 for being registered as a valuer under this section:
Provided that different qualifications may be prescribed for valuers
of different classes of assets.
36(3) Every application under sub-section (2) shall be verified in the
prescribed manner, shall be accompanied by such fees as may be
prescribed and shall contain a declaration to the effect that the
applicant will
(i) make an impartial and true valuation of any asset which he may be
required to value;
(ii) furnish a report of such valuation in the prescribed form;
(iii) charge fees at a rate not exceeding the rate or rates prescribed
in this behalf;
(iv) not undertake valuation of any asset in which he has a direct or
indirect interest.
37(4) The report of valuation of any asset by a registered valuer
shall be in the prescribed form and be verified in the prescribed manner.
Qualifications of registered valuers.
8A. (1) For the purposes of sub-section (2) of section 34AB, the
qualifications for registration as valuers of different classes of
asset shall be as specified in sub-rules (2) to (11).
(7) A valuer of stocks, shares, debentures, securities, shares in
partnership firms and of business assets, including goodwill but
excluding those referred to in sub-rules (2) to (6) and (8) to (11),
shall have the following qualifications, namely :
(i) he must be a member of the Institute of Chartered Accountants of
India or the Institute of Cost and Works Accountants of India 62[or
the Institute of Company Secretaries of India]; and
(ii) 63[(A) he must have been in practice as a chartered accountant or
a cost and works accountant or a company secretary for a period of not
less than ten years and his gross receipts from such practice should
not be less than fifty thousand rupees in any three of the five
preceding years, or]
(B) he must be a person formerly employed
(a) in a post under Government as a gazetted officer, or
(b) in a post under any other employer carrying a remuneration of not
less than Rs. 64[2,000] per month,
and, in either case, must have retired or resigned from such
employment after having rendered service for a period of not less than
65[ten] years in the field of audit and accounts or taxation work 66[, or]
66[(c) as a Company Secretary 67[or a Deputy Company Secretary] or an
Assistant Company Secretary in a post carrying a remuneration of not
less than Rs. 68[2,000] per month and must have retired or resigned
from such employment after having rendered service for a period of not
less than 69[ten] years.]

Depositaries act

23C. Right to legal representation. — The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal.

Explanation. — For the purposes of this section, —

(a) ';chartered accountant'; means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act:

(b) ';company secretary'; means a company secretary as defined in clause (c) os sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

(c) ';cost accountant'; means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

(d) ';legal practitioner'; means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.

Securities contracts regulation act

22C. Right to legal representation. — The appellant may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to present his or its case before the Securities Appellate Tribunal.

Explanation. — For the purposes of this section, —

(a) ';chartered accountant'; means chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

(b) ';company secretary'; means a company secretary as defined in clause (c) of sub-section (10 of section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

(c) ';cost accountant'; means a cost accountant as defined in clause (b) of subsection (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

(d) ';legal practitioner'; means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.

22D. Limitation. — The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far as may be, apply to an appeal made a to a Securities Appellate Tribunal.

Cost Audit in Global Perspective-Emerging Global economic order and the relevance of Cost records.

Cost Audit –Here to stay in a Global perspective.
Maintenance of Cost records and Audit of the same has been in India since long and
recognized in the companies act 1956 by an amendment in 1965.The main intention
of the legislature was laying emphasis on controlling cost and setting up an
administrative pricing mechanism to protect the interest of the society.
Its emphasis is manifold unlike maintenance of financial records and its audit year on
year basis. While financial accountants addresses the needs of owner partially they
seldom address the interests of the society at large. In this context Maintenance of cost
records through a compliance mechanism has to travel a longway since the same is not
yet compulsory across board among companies(exemption to small scale sector)across
sectors(services and agriculture still to take up)Regularity(audit depends on order from
CAB even when Cost records maintenance is made compulsory)Accounts not certified by
qualified cost accountant(where Audit is not ordered ).
In the above back drop let us discuss few lines about the hype created in the Industry
circle about abolition of cost audit in global perspective.
First of all one must understand that maintenance of records reflecting cost of production
and services is the primary need for any business and in the global scenario it is all the
more vital .Unlike formatted financial accounts, which lay emphasis on recording of
transaction in a double entry mode, Cost accounts concentrate on business process
through a planning mechanism(budget) setting up of standards for physical and financial
incurrence(thus an inclusive mechanism of financial and non-financial measure) and
records transaction in a double entry mode to reflect a true and fair view for business
sustenance and growth.Its vision covers the interests of all internal and external
stakeholder and thus all encompassing.
Cost accounting is, State of Economy-Neutral, in the sense it does not simply focus on
recording transactions to claim such a neutrality while it addresses issues of economic
prosperity, its sustenance, through resource planning and overall growth
perspective(through enabling business process re-engineering) in the global arena.
Be it Capitalist Mode where Money is driving growth{(Optimising the yield from
investment is primary concern through internal(Process efficiency ) and
external(Delivery end-to-end and Income maximization) re-engineering)}.Be it Socialist
which lay emphasis on Planning process for resource allocation and egalitarian approach
to push a sustainable growth forward.
It is sector neutral since there is a longstanding and a reliable relation between money and
its exchange(Goods and services) and Cost is relational parameter for measuring value to
a business.
It impacts business cycle and prolongs the process, if not , completely plug the process
of concentration of economic power by checking the system and allowing efficient
process to flow thereby protecting the stakeholders from vagaries of business cycle.
It is something related to good governance and fair practices in “business and
governance of the economy “and can be defined for all the socio-economic setup and is a
very dynamic tool for measuring growth and efficiency.
The relevance of the stakeholders is better addressed in a liberalized and global setup
than a controlled setup and the relevance of cost accounting in the emerging world order
can only be better emphasized by looking into the global consumer and business
perspective. Infact the global scenario has complicated the economics of scale and
resource consumption specially, the speed of delivery, that we need to fall back on cost
accounting as addressing the whole range of issues that are the expectation of community
of nations.
Cost accounting is” Forms of business” neutral in that it addresses the core issues of
Value engineering for recording of transaction and has the business perspective, rather
than simply counting numbers it grows numbers and directs a sustainable growth in the
economy.
In the light of what has been stated above it is highly relevant and utmost imperative to
infuse the culture of recording transaction in the cost accounting mode transcending
business territories , economic model adopted by the state and the forms of business and
also in the governance of the economy.
In this context Indian economy had made a good beginning way back in 1965 and if the
realization of social-cost benefit is percolated down the line and addresses individual
citizens perspective in the society that is well geared in a political setup where
individual citizen has the right of choice to elect the representative to govern the society
and the resources, which is of common concern ,and the business model and any
economic activity is, that of exploitation of resources owned in equal measure of right
and opportunity by every citizen of India, then the agency factor comes alive for any
exploitors who come to the forefront of such activity and hence they are liable not only to
their business interest but also to the community interest and in that Cost accounting is a
potent tool of measurement. The object of competition and free movement of goods and
services is to plug inefficiency in global perspective and improve efficient delivery model
and these can seldom be addressed by financial statements of Profit and loss account
and balance sheet.
Having discussed at length of the requirement of cost accounting in the global economic
scenario we will now deal with what can be the way ahead from the stakeholders
perspective. These are recommendations to march ahead.
1.IFAC a world body of accountants which has yet far concentrated on the management
accounting issues should be geared with the might of Management accounting bodies to
come up with Statements of management accounting practice that is “economy, sector
and business forms neutral” which addresses the triple bottom line issues in global
perspective.
2.ICWAI in its interest and in the interest of stakeholders at large become proactive in
the delivery model (end to end) to percolate cost consciousness and other management
accounting related issues. It should come with policy guidelines that will push forward
reforms in accounting practices in the Indian context. It should also ensure quality man
power is made available in five years from now positioning the management accounting
model where the demand could be anywhere between 500000 to 1000000.
3.The GOI should become proactive and also come with a policy paper on the Inclusive
accounting aspect(financial and management accounting) addressing socio-economic
model of sustainable growth. It should re-position the role of Management accountant
as a Public accountants on par with Chartered accountants in all spheres of economic
activity and encourage them to participate in the process of maintenance of accounts and
audit in all forms of business and in government specially Taxation and budgeting
aspect.It should also shift away from the belief that ICAI is be all and end all of
Accounting and auditing profession.
4.Various economic legislation should define the role of Management accountant
clearly addressing the needs of our society.
Specific issues that needs to be re looked and amendments sought are:
1.Companies act should make a provision for Compulsory maintenance of cost records
for all businesses registered with it and allow audit on par with Statutory financial audit.
The cost auditor should submit its report to the Board and where after a gist can be
presented before the AGM.
2.All other forms of business where specific legislation is available should have
compulsory maintenance of cost records as a mandatory provision.
3.TAX departments should extensively use the services of Cost and Management
accountants in the process of collection of tax revenue.A process of auditing cost records
should be in place to ascertain exact cost of transaction and true determination of Income.
4.Government should recognize the true potential of Cost and management accountants
and employ them under ICAS or in consultancy assignments as an expert in social-cost
benefit analysis. The services should also be utilized in various regulatory frame work
that is coming up in administrative ministries for determination of fair price and
efficiency parameters.
CMA.R.Veeraraghavan

TRAI-Account separation and the role of cost and management accountant

4. Reports - (1) Based on the information available in the books of accounts and
other documents specified in the Rules and the order/notification issued there
under, service provider shall prepare geographical area-wise following financial
and non-financial reports: -
Financial Reports
Profit and Loss Statements
(i) Profit and loss statement of the products mentioned in column (4)
against services rendered by the service providers specified in column
(2) of the Schedule I. The statement shall be prepared in the Proforma
“A” of Schedule III;
(ii) Separate Profit and Loss statement for each of the service rendered by
the service provider and specified in regulation 1(2). The statement
shall be prepared in the Proforma “B” of Schedule III;
Page 5
Product Cost Statement
(iii) Product wise Cost Sheet in the Proforma “C” of Schedule III;
Network Element Cost Statements
(iv) Network Element wise Cost Sheet shall be prepared which clearly
indicates cost and its allocation to various products. An indicative list
of Network elements of services for which these cost sheets shall be
prepared is at Schedule II. However, the list of network elements shall
depend on network architecture used by the service provider. The
Network Element Cost Statements shall be prepared in the Proforma
“D” of Schedule III;
(v) A summary sheet showing network element wise total cost, cost driver
and cost per unit of usage. The statement shall be prepared in Proforma
“E” of Schedule III;
(vi) A summary sheet indicating network element wise cost allocated to
various products. The statement shall be prepared in Proforma “F” of
Schedule III;
Capital Employed Statements
(vii) Capital Employed Statement for each of the service rendered by the
service provider and specified in regulation 1(2). The statement shall
be prepared in Proforma “G” of Schedule III;
(viii) A statement showing allocation of capital employed for a service to the
network elements. The statement shall be prepared in Proforma “H” of
Schedule III;
Fixed Asset Statement
(ix) Statement showing category wise fixed assets and depreciation in the
Proforma “I” of Schedule III’; and
Non-Financial Report
(x) A statement of operational data relating to network architecture,
network usage, network capacity, product, services volumes, tariffs,
etc. Reports for services mentioned in Regulation 1(2) shall be
prepared in Proformae “L” to “T” of Schedule III.
(2) The service providers shall prepare Reports mentioned in Regulation 4 (1) every
year on the basis of historical cost accounting and every second year on the basis
of replacement cost accounting:
Provided that if less than three years have elapsed since issue of the license to
provide a particular service, the financial statements based on Replacement Cost
Accounting may not be prepared for that service.
Page 6
(3) The profit and loss statement and capital employed statement mentioned under
Regulation 4(1) of this regulation prepared on the basis of the Historical cost
Accounting shall be reconciled with the Annual Financial Statement of the
service provider prepared under Section 211 of the Companies Act, 1956. The
reconciliation statements shall be prepared in Proformae J and K of Schedule III.
(4) The service providers shall prepare financial reports mentioned in regulation
4(1) on the basis of replacement cost accounting, by-
(i) following financial capital maintenance methodology;
(ii) limiting cost adjustment to the fixed assets;
(iii) ignoring replacement cost adjustment for assets having life of less
than 3 years;
(iv) taking cost of modern equivalent asset when existing asset is not
available due to change in technology. Whenever, old asset is
replaced by modern equivalent asset, change in operational
expenditure as a result of such replacement shall also be accounted
for; and
(v) clearly indicating holding gain or loss, supplementary depreciation
and change in the operational cost due to replacement of old asset by
modern equivalent asset.
5. Periodicity of submission of report � (1) The service providers
shall submit
audited reports based on the historical cost accounting every year
within six
months of the end of accounting year to the Authority.
(2) The service provider shall also submit reports based on the
replacement cost
accounting every second year within six months of the end of
accounting year to
the Authority.
(3) The reporting period shall be same as followed by the company for
preparation
of the annual financial accounts under sub section (4) of section 210
of the
Companies Act, 1956.
Provided that, if reporting period exceeds fifteen calendar months,
the accounting
separation statements shall be divided into 12 months and the balance
period.
6. Audit - (1) Every service provider, to which these regulations
apply, shall appoint
an auditor who is qualified for appointment as an auditor under
section 224 or
233-B of The Companies Act, 1956.
(2) The auditor shall audit the reports so prepared.
(3) The auditor in his report shall express an opinion as to whether
the reports
have been properly drawn in accordance with the regulation and he has
received
all information and explanation necessary for the purpose of audit.
7. Confidentiality - The Authority shall ensure the confidentiality of
the financial
information submitted under various provisions of the Regulation.
Page 7
Provided that, where the Authority is of the opinion that it is
necessary or
expedient to disclose the information in public interest, it may, for
reasons to be
recorded in writing, do so.
Provided further that no information shall be disclosed by the
Authority, except
after giving the company an opportunity of making such representation
in writing,
as it may wish to make in that behalf and taking such representation into
consideration.

National Tax Tribunal Act 2005 and Cost Accountant?

13. Appearance before National Tax Tribunal.—(1) A party to an appeal other than Government
may either appear in person or authorise one or more chartered accountants or legal practitioners
or any person duly authorised by him or it to present his or its case before the National Tax
Tribunal.
) The Government may authorise one or more legal practitioners or any of its officers to present its case before the National Tax Tribunal.

Cost Audit -A paradigm view.

Re: Cost Audit Again in News-Business Line.

--- In CMA_India@yahoogroups.com, "CMA.R.Veeraraghavan" wrote:
>
>

Sir

This has reference to the Article in the opinion section of your daily on 12-10-2006 "Should we bid adieu to cost audit?".by A.R.Ramanathan.

In addition to what the esteemed author has stated- for the government and the industry to re-orient its outlook towards the exercise, I would like to add the following which may kindly be Published.

While questioning the requirement of Cost audit time and again one must analyse in totality why Cost audit is required and for that, one must know the deficiency and focus of related audit systems that have been statutorily sanctified ,specially the Financial Audit:

The focus of financial audit is scrutiny of financial records(Income and expenses)to ascertain and repose faith in the profits projected, Value of assets and liability in a given period, Propriety of the transaction of income and outgo. Simply this is the essence of scrutiny of financial records. Its focus is Shareholders of the company who are supposedly wealth creators of the business.

Financial records fail miserably in speaking out about the internal strength, efficiency, and sustenance aspect of the business ,which a seasoned businessman is interested. Financial records do not also reflect the wealth creation for the society at large(no macro economic outlook).

It doesn't question price-output-cost relation as well, it doesn't also address the competitors strategy and our strength. In essence it is simply a documentation of inflow-outflow data and projection of residue as gain available for distribution.

Financial audit is shortsighted in its approach and Blind towards societal interest.

The focus of Cost-audit is stake-holders at large (every citizen of India is a stakeholder in the economic activity of the country) Cost records basically reflect Cost incurred in the activity and the drivers that enable such incurrence and thus warn the business to moderate the drivers in advance. It speaks amply about utilisation of resources which is vital for managing an economy. It discloses the reasonability or otherwise of the pricing module which is important to bringing an exploitation free society.

Cost records scrutiny is vital for business sustenance as well ,when we talk of demutualisation of management and owners. Management perspective is sustenance and efficiency and these two are amply addressed by cost records, through its methods and techniques which are prescriptive(Like budgeting, standard costing ,variable costing, pricing methods like target pricing etc.)

Do owner-investor benefit from this exercise, yes in the long run an investor is unconcerned with immediate gains but the vision of business to sustain and its data projecting bottomline efficiency is utmost important for a owner-investor,

While a government benefit from the cost data for planning,resource monitoring,Price controls and comparative industry study with authentic cost data.The tax department benefits from the hard work of Cost accountants both inrespect of Direct tax(where the basis is to judge from allowances and disallowances and mapping with cost to business activity)and indirect taxes(where Cost of goods and services is vital).

It is thus unfortunate to see cost audit often being projected in negative perspective by one and all and in a democracy the conflict of interest in sharing such data is just in the maxim"what is good for all is many a times not good for a few who rule". which sans the basic framework of the constitution"Of the people, by the people and for the people".

Improving reporting methodology, switching from becoming just a prescriptive exercise to a value-added and dynamic tool can trigger focus on cost audit. Audit itself is an art of handling data to produce decision tools and cost auditor should now-on be proactive and prove value addition to the management. Cost audit in India is there to stay for long and i am confident about it and the world can learn from us in this regard.

Thanx

CMA.R.Veeraraghavan

EXIM Policy and Practising Cost accountants

Click on the heading above to go places.
AAYAAT- NIRYAAT FORM
HANDBOOK OF PROCEDURES VOLUME 1, 2004-09
as amended upto 8 th April 2005
GUIDELINES FOR APPLICANTS
1. Two copies of the application must be submitted unless otherwise mentioned.
2. Each individual page of the application has to be signed by the applicant.
3. a. Part 1 & Part 4 has to be filled in by all applicants. In case of applications submitted
electronically, no hard copies of Part 1 may be submitted. However in cases where
applications are submitted otherwise, hard copy of Part 1 has to be submitted.
b. Only relevant portions of Part 2 & Part 3 need to be filled in.
4. Application must be accompanied by documents as per details given below:
I. For Importer Exporter Code Number (IEC)
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Certificate from the Banker of the applicant firm in the format given in Appendix 18A.
3. Self certified copy of Permanent Account Number (PAN) issued by Income Tax
Authorities.
4. Self certified copy of RBI approval in cases where non resident interest/holding in the
firm/company exists with repatriation benefits.
II. For Import Licence for Restricted Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of
application fee in terms of Appendix 21B.
2. Self certified copy of Proforma Invoice from foreign supplier showing CIF value of the
goods.
3. Self certified copy of Registration Certificate issued by concerned authority.
4. Self certified copy of the recommendation letter by the concerned authority.
5. In case of import of gift, Donor's letter in Original.
6. In case of import of Ammunition, a certificate from the Chartered Accountant/Cost and
Works Accountant/Company Secretary showing sales turnover of ammunition
(indigenous and imported) during the preceding three licensing years.
II A. For Import Certificate under Indo – US Memorandum
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of letter from US supplier in support of request for Import Certificate.
III. For Export Licence for Restricted Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of Export Order.
III A. For Export Licence for SCOMET Items
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. For Export of Special Chemicals in Categories 1B a nd 1C of Schedule 2 Appendix
3 of ITC (HS) Classification of Export & Import items:
a. Self certified copy of Export Order.
b. End User certificate indicating the end product for which the item of export will be
used by end user in the format given in Appendix 3 6.
3. For Export of all other category items of Schedule 2 Appendix 3 of ITC (HS)
Classification of Export & Import items except those given in serial no 2 above :
a. Self certified copy of Export Order.
b. End User certificate indicating the end product and/or end purpose for which the item
of export will be used by end user in the format given in Appendix 36.
c. Technical Specifications of the items to be exported (not exceeding one page for
each item).
d. Self certified copy of Bill of Lading for items exported earlier under a Licence as per
serial no. 3 of Part B of sub section III A.
IV. For Star Export House Certification
1. Self certified copy of valid RCMC.
2. Statement of exports made in the preceding three licensing years and/or current
licensing year duly certified by a Chartered Accountant/Cost and Works Accountant in
the format given in Appendix 26.
3. Self certified copy of the Balance Sheet filed with Income Tax Authorities for the relevant
year(s).
V. For Advance Licence applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Additional documents required in case of issue of Advance Licence for Annual
Requirements:
a. Statement of exports made in the preceding licensing year duly certified by a
Chartered Accountant/Cost and Works Accountant in the format given in Appendix
26.
b. Self certified copy of the manufacturing licence of the applicant firm or his supporting
manufacturer.
3. Additional documents required in case of issue of DFRC:
a. In case of physical exports
i. EP copy of the Shipping Bill or Bill of Export (only in case of exports through
notified land Customs under paragraph 4.19)
ii. Bank Certificate of Exports and Realisation as given in Appendix 22A or
Foreign Inward Remittance Certificate (FIRC) in the case of direct negotiation of
documents or Appendix 22D in the case of offsetting of export proceeds with
approval of RBI. In case of FIRC, a declaration from the exporter that the
remittance is in respect of Shipping Bill(s) No ____________ dtd _________
shall also be furnished.
iii. Statement of exports/supplies giving separately each Shipping Bill number/Bill of
export number and date, FOB/ FOR value in Indian rupees as per Shipping Bill/
Bill of export and description of the resultant product.
b. In case of deemed exports
i. Copy of the invoice duly signed by the unit receiving the material and their
jurisdictional excise authorities certifying the item of supply, its quantity, value
and date of such supply. However incase of supply of items, which are nonexcisable
product(s), a project authority certificate (PAC) certifying quantity,
value and date of such supply would be acceptable in lieu of excise certification.
Not withstanding the above, in respect of supplies to EOU, a copy of ARE-3 duly
signed by the jurisdictional excise authorities certifying the item of supply, its
quantity, value and date of such supply shall be furnished.
ii. Payment certificates from the project authority as per Appendix-22C or
payment certificate or bank certificate of payment for domestic supplies as per
Appendix 22B which ever is applicable.
iii. Statement of supplies giving separately each supply invoice number and date,
FOR value in Indian rupees as per invoice and description of th e resultant
product.
4. In cases where import of fuel has been sought for the grant of Advance Licence/
Advance Licence for Annual Requirements/ DFRC (excluding Advance licence
applications for ad-hoc norms and those under Para 4.7 of Handbook)
a. Self certified copy of the permission issued to the manufacturer exporter by the
competent authority (concerned State Electricity Board or Power Corporation or
Regulatory Commission of the State) under Section 44 of the Electricity (Supply) Act,
1948 for the installation of captive power plant based on the specified fuel unless the
permission is specifically waived by the State Electricity Board; and
b. Self certified copy of the letter intimating the date of commissioning of the captive
power plant from the concerned authority which issued the permission letter is to be
submitted.
Note: The import of only such fuel(s) shall be allowed which have/ has been specified in
the said permission.
5. Additional documents required in case of supplies under deemed
export/intermediate supplies under Advance Licence Scheme:
a. Invalidation letter in case of supplies to
i. an EPCG licence holder;
ii. an Advance Licence holder;
b. Project Authority certificate in case of supplies other than (a) (i) & (ii) above and to
EOU/ EHTP/ STP/BTP units;
6. Additional documents required in case of issue of Advance Licence under Para
4.7 of Handbook
a. Information as per Appendix-11A.
b. 1. Technical Details of the export product as per the details given in Appendix 33
2. Chartered Engineer certificate certifying the import requirements of raw materials
in the format given in Appendix 32B
3. Production and Consumption data of the manufacturer/supporting manufacturer
of the preceding three licensing years, duly certified by the Chartered accountant/
Cost & Works Accountant/ Jurisdictional Excise Authority.
V A. For GEM REP applications
1. Bank Receipt (in duplicate)/Demand Draft evidencing payment of application fee in
terms of Appendix 21B.
2. Bank certificate of export and realisation in the format given in Appendix 22A evidencing
realisation of exports proceeds/sales proceeds.
3. Export Promotion (EP) copy of Shipping Bill(s) in Original. (Photocopy of the EP copy of
Shipping Bill duly endorsed may be returned for utilization/re-import purposes when the
exports are made on consignment basis).
4. Customs attested invoice.
5. In case of application for Replenishment licence under paragraph 4A.28 of this
Handbook, an applicant will be required to submit documents as given at S.No.1 above
and Statement of Exports made during the preceding licensing year duly certified by
Chartered Accountant/Cost & Works Accountant in the format given in Appendix 26.
V B. For Diamond Imprest applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of valid RCMC.
3. Self certified copy of Export Order.
4. Statement of exports of cut and polished diamonds made during the preceding three
licensing years duly certified by Chartered Accountant/Cost & Works Accountant in the
format given in Appendix 26. The value of exports made towards fulfillment of export
obligation under Diamond Imprest Licence shall be shown separately.
V C. For DEPB applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Export Promotion (EP) copy of Shipping Bill(s). In case of exports through notified land
Customs under paragraph 4.40, Bill of Export may be accepted in lieu of Shipping Bill.
3. Bank Certificate of Exports and Realisation as given in Appendix 22A or Foreign Inward
Remittance Certificate (FIRC) in the case of direct negotiation of documents or Appendix
22 D in the case of offsetting of export proceeds with the approval of RBI. In case of
FIRC, a declaration from the exporter that the remittance is in respect of Shipping Bill(s)
No ____________ dtd _________ shall also be furnished
VI. For EPCG Licence applications
1. Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application
fee in terms of Appendix 21B.
2. Self certified copy of Drug Manufacturing License in case of export of Pharmaceutical
product or self certified copy of IEM/SSI Registration Number in case of other products
or a self certified copy of Service Tax Registration in case of Service Providers.
3. Certificate from a Chartered Engineer in the format given in Appendix 32A certifying:
a. the end use/nexus of machinery sought for import under EPCG Scheme in the pre
production/production/post production activity of the exported goods/services
(explaining the end use of machinery in detail); and/or
b. the essentiality of spare parts sought for import and its required quantity for existing
machinery manufacturing the goods to be exported/ machinery sought for import;
and/or
c. complete usage of equipments/goods sought for import under the EPCG Scheme for
supply of service to overseas customers/ service consumers of any other country in
India to earn free foreign exchange/supply of service in India relating to export paid
in free foreign exchange.
4. Statement of exports made/services rendered by the applicant firm in respect of the
same/similar export product/services rendered during the preceding three licensing
years duly certified by a Chartered Accountant/Cost and Works Accountant in the format
given in Appendix 26.
5.

The broader sketch of areas in which u can find cost accountants are engaged.

This should primarily contain each practising members area ofoperations classified as One major area and other area based onrevenue generation or clientele.This would focus the institute on marketing services of CostAccountants.The PCAs need not be asked to divulge clientele or revenueinformation but simply a self declaration as to the activities.The areas under coverage should be broadly:
1.Maintenance of Books accounts(Including Cost accounts wherenecessary).
2.Engaged in Establishment and design(customisation)of Accounts(Financial as well as Cost accounts).
3.Internal Audit(Including design and certification).
4.Rendering Accounting services for non-corporates.
5.Engaged in Consultancy services relating to various Tax laws forbusiness.
6.Acting as Authorised representatives under the provisions ofvarious laws(Taxation and others)
7.Rendering Management Consultancy.
8.Engaged In Statutory Cost Audit.
9.Engaged in Attest Functions under VAT and Central Excise andCustoms Acts.
10.Engaged in rendering Financial services(Brokering,Portfoliomanagement.
Any Other Services if that is what the Practising CA is engaged in.
This would finally help in pooling resources of expertise to pass onto the next breed of Cost accountants in the make.I think council members will make this concscious decision soonerthan later.
In addition they can be engaged as consultants in Project management ,Specific assignments from Governments etc

Cost Accountants to establish Professional accounting firms to help business maintain accounts in complinace with various laws.

Accounting services as distinct from audit and attest services are well developed in many countries.As a Professional Accountant A cost accountant in practice can help business establish a well knit accounting mechanism.Establish internal controls and perform internal audit.
Accounting function is largely inhouse in organised business in india but sooner than later this function will be a outsourced function with comparative cost-benefit.Practising Cost Accountants should sharpen their edges to deliver the business the value addition needed with respect to various compliances.
In addition Cost Accounting system whereever prescribed are to be guided by a cost accountant for the industry and business houses to comply with.
Many business entity that have been prescribed to maintain cost accounts find it difficult to comply for want of trained Cost accountants.The role of cost accountants multiplies here.Infact if the practising cost accountants keep track of this many companies will start complying with the provisions.
The gist of applicability is mentioned below:
Books of account to be kept by company:

209(1) Every Company shall keep at its registered office proper books of account with respect to -
(a) ......
(b) ......
(c) .....
(d) in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account:

Provided that all or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.

In exercise of the powers conferred by sub section (1) of section 642 read with clause (d) of sub
section 209 of the Companies Act, 1956, (1 of 1956), the Central Government hereby makes the following rules,
namely:-
1. Short Title and Commencement:-
(1) These rules may be called the cost Accounting Record []* Rules, 1967.
(2) They shall come in to force on the 1st day of October 1967.
2. Application:- They shall apply to every company engaged in the production or manufacturer of []* excepting
those companies falling under the category of small scale industrial units.
Explanation - For the purpose of this rule, the expression "small scale industrial undertaking" means a
company -
(a) [the aggregate value of the machinery and plant installed wherein does not exceed The limit as
specified for a small scale industries (Development and regulation ) Act.1951 (65 of 1951), as on the last date of
the preceding financial year and]1
(b) [the aggregate value of the realization made by the company from the sale or supply of all its products
during the preceding financial year does not exceed ten crore rupees.]2
3. Maintenances of Records:-
(1) Every Company to which there rules apply shall in respect of easy of its accounting years commencing
on or after the 1st day of October, 1967,[till the 31st day of March,2000]3 keep proper books of account
containing inter alia particulars specification in I and II annexed to these rules relation to utilization of material,
labour and other items of cost so far as they are applicable to it.
(2) The book of account aforesaid shall be kept in such a way as to make it possible to calculate the cost of
production of ----produced during the financial year of the Company (hereinafter referred to
the relevant period) from the particulars entered therein.
[(3) Every company to which these rules apply shall, in respect of each of its financial year commencing
on or after the 1st day of April, 2000 keep proper books of account containing, inter alia, the particulars
specified in Schedule III and Proforma mentioned in the said Schedule annexed to these rules relating to the
utilization of materials, labour and other items of cost in so far as they are applicable to cycles and components
thereof.
Provided that if the said company is manufacturing any other product or is engaged in other activities in addition
to manufacture of cycles and components thereof, the particulars relating to utilization of materials, labour and
other items of cost in so far as they are applicable to such other products or activities shall not be included in the
cost of cycles and components thereof.
(4) The books of accounts referred to in sub-rules(3) shall be kept on a regular basis in such a manner as
to make it possible to calculate the cost of production and cost of sales of all makes of cycles and components
thereof for every financial year from the particulars entered therein and every such books of account and the
proforma specified in Schedule III annexed to these rules shall be completed not later than ninety days from the
closing of the financial year of the company to which they relate.
(5) Statistical and other records shall be maintained in accordance with the provisions of the Schedule III
annexed to these rules, which shall be such as to enable the company to exercise as far as possible, control over
the various operations and costs with a view to achieve optimum economies in cost and provide the necessary
data required by the Cost Auditor to suitably report on all the points referred to in Cost Audit (Reports)
Rules,1996.
(6) It shall be the duty of every person, referred to in sub-section(6) and sub-section(7) of section 209 of
the Companies Act 1956 (1 of 1956), to take all reasonable steps to secure compliance by the company with the
provisions of sub-rules (1), (2), (3), (4) and (5) of this rule in the same manner as he is liable to maintain
accounts required under sub-section(1) of section 209 of the said Act".]4
4. Penalty:- If a company contravent the provision of rule 3, the company and every officer of the company
who is in default [including the person referred to]5 in sub-section (6 of section 209 of the Company Act 1956 (1
of 1956) shall be punishable with fine which may extend to five hundred rupee and where the contravention is a
continuing one, with a further fine which may extend to fifty rupees for every day after the first during which
such contravention continue.

Valuer under wealth tax act

(7) A valuer of stocks, shares, debentures, securities, shares in partnership firms and of business assets, including goodwill but excluding those referred to in sub-rules (2) to (6) and (8) to (11), shall have the following qualifications, namely :
(i) he must be a member of the Institute of Chartered Accountants of India or the Institute of Cost and Works Accountants of India 62[or the Institute of Company Secretaries of India]; and
[(A) he must have been in practice as a chartered accountant or a cost and works accountant or a company secretary for a period of not less than ten years and his gross receipts from such practice should not be less than fifty thousand rupees in any three of the five preceding years, or]
(B) he must be a person formerly employed
(a) in a post under Government as a gazetted officer, or
(b) in a post under any other employer carrying a remuneration of not less than Rs. 64[2,000] per month,
and, in either case, must have retired or resigned from such employment after having rendered service for a period of not less than 65[ten] years in the field of audit and accounts or taxation work 66[, or]
66[(c) as a Company Secretary 67[or a Deputy Company Secretary] or an Assistant Company Secretary in a post carrying a remuneration of not less than Rs. 68[2,000] per month and must have retired or resigned from such employment after having rendered service for a period of not less than 69[ten] years.]

Cost Accountant and Competition Act

Section 2(g) of the rules of the competition rules and section 35 of the competition act enables a cost accountant in practice as a counsel on behalf of the client to represent before the commission.

Appearance before Commission
35. A complainant or defendant or the Director General may either appear in person or authorise one or
more chartered accountants or company secretaries or cost accountants or legal practitioners or any of
his or its officers to present his or its case before the Commission.
Explanation.—For the purposes of this section,—
(a) "chartered accountant" means a chartered accountant as defined in clause (b) of sub-section (1)
of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a
certificate of practice under sub-section (1) of section 6 of that Act;
(b) "company secretary" means a company secretary as defined in clause (c) of sub-section (1) of
section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a certificate
of practice under sub-section (1) of section 6 of that Act;
(c) "cost accountant" means a cost accountant as defined in clause (b) of sub-section (1) of section 2
of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act;
(d) "legal practitioner" means an advocate, vakil or an attorney of any High Court, and includes a
pleader in practice.

1
I
2. Definitions –
(1) In these Regulations, unless the context otherwise requires:
(a) "Act" means the Competition Act, 2002 (12 of 2003);
(b) "Bench" means Bench constituted under Section 22 of the
Act and includes the Principal Bench, Additional Bench,
Mergers Bench and Special Bench. Special Bench means
larger Bench constituted under sub-section (4) of Section 23
of the Act.
(c) "Chairperson" means the Chairperson appointed under
Section 8 and includes the senior-most Member acting as
Chairperson under sub-sections (4) of Section 10 and the
senior most Member discharging the functions of the
Chairperson under sub-section (5) of Section 10 of the Act;
(d) "Commission" means the Competition Commission of India
established under Section 7 of the Act;
(e) "Complaint" means and includes complaint or reference falling
under Section 19 of the Act;
(f) "Complainant" means a person who or the Central
Government or a State Government or a Statutory Authority
which makes complaint to the Commission.
(g) "Counsel" means and includes a legal practitioner, a
chartered accountant, a company secretary, a cost
accountant as defined in Explanation to Section 35 of the
Act;

Cost Accountants Role in Certifying adequacy of Internal Audit

New Delhi, the 27th December, 2001
G.S.R. 924(E).- In exercise of the powers conferred by 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),
and in supersession of the Cost Audit (Report) Rules, 1996, except as respect things done or omitted to be done,before such supersession, the Central Government hereby makes the following rules, namely
:-
FORM OF THE COST AUDIT REPORT
[See rule 2(c) and rule 4]
FORM OF THE COST AUDIT REPORT
[See rule 2(c) and rule 4]

3. 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.
5. The Cost Auditor may also give his other observations and suggestions, if any, relevant to the cost
audit.

Audit of accounts of cooperative society act-multi state cooperative act

CHAPTER IIIAUDIT AND ACCOUNTS
16. Books of accounts-
Every multi-State cooperative society shall keep books of account with respect to :-
(a) all sums of money received and expended and the matters in respect of which the receipt and expenditure take place;
(b) all sales and purchase of goods;
(c) the assets and liabilities;
(d) in the case of a multi-State cooperative society engaged in production, processing and manufacturing, particulars relating to utilisation of materials or labour or other items of costs as may be specified by the Central Registrar.
17. Subject matter of audit-
(1) The audit of a multi-State cooperative society under sub-section(1) of section 67 shall include, in addition to the matters specified in sub-section(2) of that section the following particulars:
(a) Whether the auditor has obtained all the information and explanations which, to the best of his knowledge and belief are necessary for the purposes of his audit;
(b) whether in his opinion proper books of accounts as specified in these rules and bye-laws have been kept by the multi-State cooperative society so far as it appears from the examination of those books and proper returns adequate for the purposes of his audit have been received from the branches not visited by him;
(c) Whether the balance-sheet and profit & loss account exhibit a true & fair view of the state of affairs of the multi-State Cooperative society according to best of his information and explanation given to him and as shown by the books of the multi-State cooperative society; and
(d) Whether there has been any material impropriety or irregularity in the expenditure or in the realisation of money due to the multi-State cooperative society.
(2) Where in any of the matters referred to in sub-rule (1) the answer is in the negative or in the affirmative with any remark, the auditor shall give reasons for such answer with facts and figures in support of such remarks.
(3) The audit report shall also contain schedules with particulars of:-
(a) all transactions which appear to be contrary to the provisions of the Act, the rules or the bye-laws of the multi-State cooperative society;
(b) Any money belonging to the multi-State cooperative society which appears to the auditor to be bad or doubtful of recovery;
(c) The loans given by the multi-State cooperative society to the members of the board; and
(d) any other matter as may be specified by the Central Registrar in this regard.
(4) The auditor shall make his report to the multi-State cooperative society and also send a copy of that report direct to the Central Registrar.
The Central Registrar may for reasons to be recorded in writing, direct that if any portion of the audit report which appears to him of objectionable nature or not justified, be expunged and the portion so expunged shall not form part of the audit report.
(5) The audit report given by the auditors shall be considered by the board of a multi-State cooperative society and placed before the general body with their comments.
(6) The defects pointed out by the auditors in the working of the multi-State Cooperative society shall be specifically considered by the board and a compliance report explaining the measures taken to rectify the defects
be submitted to the Central Registrar within three months of the receipt of the audit report.
*Rule 18
__________________
*There is no rule under Serial No.18.
CHAPTER VIIAUDIT, INQUIRY, INSPECTION AND SURCHARGE
67. Audit -
(1) The Central Registrar shall audit, or cause to be audited by a person authorised by him by general or special order in writing in this behalf, the accounts of every multi-State cooperative society at least once in each year.
(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of the cash balance and securities, and a valuation of the assets and liabilities of the multi-State cooperative society.
(3) The person auditing the accounts of a multi-State cooperative society shall have free access to the books, accounts, papers, vouchers, stock and other property of such society and shall be allowed to verify its cash balance and securities.
(4) The directors, managers, administrators and other officers of the multi-State cooperative society shall furnish to the person auditing the accounts of the society all such information as to its transactions and working as such person may require.
(5) The Central Registrar or the person authorised by him under sub-section (1) to audit the accounts of a multi-State cooperative society shall have power, where necessary -
(a) to summon at the time of the audit any officer, agent, servant or member of the society, past or present, who, he has reason to believe can give valuable information in regard to transactions of the society or the management of its affairs; and
(b) to require the production of any book or document relating to the affairs or, any cash or securities belonging to, the society by any officer, agent, servant, or member of the society in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit, to take them into custody.
(6) If at the time of audit the accounts of a multi-State cooperative society are not complete, the Central Registrar or the person authorised by him under sub-section (1) to audit may cause the accounts to be written up at the expense of the society.
(7) Audit fee, if any, due from any multi-State cooperative society shall be determined by the Central Registrar and shall be recoverable in the same manner as is provided in section 89.
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Uttaranchal state:

Audit 44. (1) A co-operative shall get its accounts audited by a chartered
accountant within the meaning of the Chartered Accountants Act.
1949:
provided that where a co-operative's business turnover is less than
Rs. ten lakhs, it may appoint as auditor, any person is, from within
its membership or outside, with such qualifications as are specified
in the articles of association
(Explanation: For the purpose of this section, business turnover
shall mean the value of sales, services provided and/or loans
recovered.)
(2) A co-operative at its Annual General Meeting, shall appoint an
auditor. This appointment will be valid only until the close of the
next succeeding Annual General Meeting.
(3) The remuneration of an auditor may be fixed by the general body
or, if not so fixed, by the Arbitral Tribunal.
(4) An auditor ceases to hold office when the auditor
(a) resigns;
(b) is removed from office under sub-section
(c) completes his/her term of office.
(5) The resignation of an auditor becomes effective at the time a
written resignation is received by the co-operative, or at the time
specified in the resignation whichever is later.
(6) The general body may by a special resolution, remove an auditor
from office.
(7) An auditor, who
(a) resigns; or
(b) receives a notice or otherwise learns of a Board's meeting called
for the purpose of removing him/her from office;
is entitled to submit to the Board a written statement giving the
reasons for the auditor's resignation or the comments on the
proposed removal, as the case may be.
(8) A vacancy created by the resignation of an auditor shall be filled up
by the arbitral tribunal.
(9) A vacancy created by the removal of an auditor, too, shall be filled
up by the arbitral tribunal.
(10) An auditor appointed to till a vacancy holds office for the unexpired
term of his/her predecessor.
(11) The auditor shall be given notice of every general meeting and at
the expense of the co-operative, will be entitled to attend and be
heard thereat on matters relating to the auditor's duties as auditor
and their exercise.
(12) It shall be the duty of the Board to ensure that annual financial
statements are prepared and presented for audit within forty-five
days of closure of the co-operative's financial year.
(13) Upon the reasonable demand of the auditor of a co-operative, the
chief executive shall arrange to
(a) provide such access to records, documents, books, accounts and
vouchers of the co-operative; and
(b) furnish such information and explanations,
as are, in the opinion of the auditor, necessary to enable him/her to
make the examination and report, and as the chief executive or a
present or former Director, members, managers, or employees are
reasonably able to furnish.
(14) It shall be the duty of the auditor to ensure that audited annual
financial statements and the auditor's accompanying report are
furnished to the co-operative within sixty days of the submission of
annual financial statements by the Board.
(15) The auditor's report to the members of the co-operative shall:
(a) state whether the auditor has obtained all the information and
explanations which to the best of the auditor's knowledge and belief
were necessary for the purpose of the auditor's audit;
(b) state whether the co-operative's balance sheet and income and
expenditure account dealt with by the report are in agreement with
the books of accounts;
(c) indicate the basis on which each asset and liability was valued,
and make specific mention of any change in the manner in which
such valuation was done in the year under examination and its
effect on surplus/deficit;
(d) indicate the amount of surplus earned/deficit incurred from
provision of services to non-members as distinct from
surplus/deficit accruing because of members or in normal course of
business;
(e) indicate every deviation in actual expenses and income from the
estimated expenses and income in the approved budget;
(f) specify the gross remuneration and/or honorarium and/or
allowances paid and/or value of benefits provided, if any, to the
chief executive, any of the office bearers, or Directors, in the
financial year under audit;
(g) state whether or not any of the office bearers or Directors had
become, at any time during the year under review, ineligible under
this Act to continue in office as an office bearer or Director; and
(h) state whether the decisions on disposal of surplus or assessment
of deficit, of the general body, at its previous annual general
meeting were implemented correctly and completely or not.

Financial Companies Regulation Bill, 2000*_RBI

Right to legal representation
25. The depositor or the financial company may either appear in person or a
or more chartered accountants or company secretaries or cost accounta
practitioners or any of its officers to present his or its case under this Ac
Board.
Explanation. - For the purposes of this section, -
a. "chartered accountant" means a chartered accountant as defined in cla
subsection (1) of section 2 of the Chartered Accountants Act, 1949 (38
and who has obtained a certificate of practice under sub-section (1) of
that Act;
b. "company secretary" means a company secretary as defined in clause
section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1
who has obtained a certificate of practice under sub-section (1) of sect
Act;
c. "cost accountant" means a cost accountant as defined in clause (b) of
(1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 19
who has obtained a certificate of practice under sub-section (1) of sect

Value Added Tax and Cost Accountant.

Many states have recognised Cost Accountant to certify Accounts of business inorder to ascertain VAT collection.
Gujarat VAT Act For Instance Section 63:

63. If in respect of any particular year, total turnover of a dealer exceeds
rupees one crore, then such dealer shall get his accounts verified and audited
by a specified authority within one year from the end of that year and obtain
within that period a report of such audit in the prescribed form duly signed and
verified by such specified authority alongwith such particulars as may be
prescribed. A true copy of such report shall be furnished by such dealer to the
Commissioner within such period as may be prescribed.
Explanation.-- For the purposes of this section,-
(a) "specified authority" means,-
(i) a Chartered Accountant within the meaning of the Chartered
Accountants Act, 1949 and includes persons who by virtue of the provisions
of sub-section (2) of section 226 of the Companies Act, 1956, is entitled to be
appointed to act as an auditor of companies;
(ii) a Cost Accountant within the meaning of the Cost and Works
Accountants Act, 1959;
(iii) a legal practitioner or a Sales Tax Practitioner whose name is entered in
the list maintained by the Commissioner in accordance with the provisions of
section 81.
(b) "total turnover" shall have the same meaning as given in Explanation
below sub-section (1) of section 3.
(2) If any dealer liable to get his accounts audited under sub-section
(1) fails to furnish a true copy of such report within the prescribed time the
Commissioner shall, after giving the dealer a reasonable opportunity of being
heard, impose on him, in addition to any tax payable, a sum by way of penalty
not exceeding rupees ten thousand, as he may determine.
64. The dealer shall preserve his books of accounts and the records
relevant for the purpose of this Act till the period of eight years from the end of
the accounting year to which the books of accounts and the records relate.
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Section 42 of Kerala VAT act2003 contains provision for cost accountant to audit books of accounts.Section 42 of AP VAT act.Section 31 of Karnataka VAT act Rule 34 here provides audit by tax practitioners registered under rule 163 to audit non-company accounts.Section 65 of Orissa Act.Section 60 of J&K Act.Section 62 of Assam Act.Section 62 Of Uttaranchal Act.