Fields for Practicing Cost Accountants

FIELDS FOR PRACTICING
COST ACCOUNTANTS

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Field for Practicing Cost Accountants
 A Cost Accountant may build up his own practice by obtaining a
license from the Institute, either individually or in partnership with
one or more members of the Institute in practice and offer essential
aides to some of the regulatory functions.
 A Cost Accountant in Practice may also be a Trustee, Executor,
Administrator,Arbitrator, Receiver, Appraiser, Valuer, Advisor,
Secretary or as a Special Consultant, or as a representative for
financial matters including Taxation.


 Some of the audits undertaken by Cost Accountants:
 Cost Audit (Section 233B of the Companies Act 1956)
 Central Excise Audit (Section 14A of the Central Excise Act
1944)
 Central Excise Special Audit (Section 14AA of the Central
Excise Act 1944)
 Internal Audit
 Inventory Audit
 Concurrent audits in banks
 Sales Tax/VAT Audit
 Telecom Regulatory Authority of India (TRAI) Audit
 Special Audit under Customs Act
 Management and Operational Audit
 Service Tax Audit
 Anti-Dumping


 A Cost Accountant in practice can appear as authorized
representative before several quasi-judicial bodies such as:
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Income Tax Appellate Tribunal
Company Law Board Regulations
Customs, Excise and Service Tax Appellate Tribunal
National Company Law Tribunal
Competition Commission of India
Monopolies and Restrictive Trade Practices Regulations
Telecom Disputes Settlement and Appellate Tribunal
Securities Appellate Tribunal

A practicing Cost Accountant can also issue Certifications
a.
b.
c.
d.
e.
f.
g.
h.

Under EXIM Policy
Valuation of Assets
Under Excise Act
Under FEMA
Under Companies Act
Under Regulatory Authorities
Under Anti-Dumping Regulations
Certificates to the Banks and Financial Institutions

Other areas of his specialization include:
 Designing and introduction of Systems
 Control Functions such as inventories, debtors, working
capital management,etc.,
 Studies of problems in capacity utilization, raw material
substitution,etc.,
 Preparation of profitability forecasts
 Certification of consumption for import application
 Decision making
 Advising in the matter of purchasing a business or planning or
mergers
 Other consultancy assignments


Categories of the Fields
The fields for practicing Cost Accountants can be categorized
in following two broad Categories:
I.
a.
b.
c.
d.
e.
f.

Statutory and Specific Fields:
Audit
Taxation
Corporate Laws
Certification
Insurance
Empanelment

II.

Non-Statutory and General Fields:

a.
b.
c.

System design, Installation and Operation
Techno-economic Study
Services to Banks, Insurance Companies and other
Financial Institutions
Financial Management
Project Consultancy
Tax Planning
Materials Management
Management Accountancy
Investment Counseling and Portfolio Management
Diagnostic Accounting and Revival of Sick Units
Internal Management and Operational Audit
Organizations structure Review

d.
e.
f.
g.
h.
i.
j.
k.
l.

Certification Procedures
 Requirement to look into the facts of the cases in regard to the
correctness of facts presented and true and fair view in the
compliance to legal or other requirements.
 A clear distinction between certificate and report.
 Certificate-A written declaration consisting of facts and or opinion,
which is capable of being verified subsequently.
 Report-A detailed description of a situation or an opinion supported
by considerable background information.
• Requirement to take adequate care of his professional ethics and
code of conduct as prescribed for the profession in all its aspects
while giving his certificate.
• Adequate care of consistency in the methods followed without which
the information may get distorted.

Qualities of a Good Certificate/Report
While issuing any certificate/report, a Cost Accountant should
ensure that it contains the following information:
 Name and address of the concern and the product/purpose for
which the certificate is issued
 It should be in the prescribed form which gives the required
information.
 It should be based on verified data.
 It should contain the required explanatory notes, reservations
or qualifications depending the records produced before him.
 A suitable declaration or authentication by the Management
on the face of the certificate should be obtained.
 Certified data should bear the signature of a Director or
General Manager of the Company
 Every certificate and every page of the statement and
appendices attached to he certificate should bear the date,
signature and seal of the Cost Accountant.

 The Language used and the information presented in the
certificate should always be unambiguous.
 The Cost Accountant should give a proper note for all the
inclusions/exclusions to/from the Certificate
 The Certificate should be drafted as to covey the factual
situation without the ambiguity.
 It should be a self-contained document
 It should include a reconciliation between the figures in the
general purpose financial statements and the figures appearing
in the report.
 A suitable reference to he notes attached to a Certificate should
be mentioned in the main certificate.
 Where the Cost Accountant wishes to qualify his report, he may
indicate it under “Notes”
 The Certificate may be addressed to a client, the public
authority, or the person requiring it.


While issuing a Certificate a Cost Accountant should be clear on
the following matters:
 Be clear of what is to be certified.
 Understand precisely the purpose for which the certificate is
required and its possible implications.
 Study the relevant Act and rules affecting the operations to
which the Certificate relates.
 Understand accounting system of the client.
 Verify as much data needed to give an opinion.
 Keep notes of verification drill and file working papers
properly for easy access at later date.
 Draft the report carefully.
 Be certain and definite on facts.
 Give valid reasons for the opinions.
 Be consistent, logical and factual.
 Apply uniform accounting/cost accounting principles
consistently.

WORLD TRADE
ORGANISATION(WTO)


General Agreement on Tariffs and
Trade(GATT)





The predecessor of WTO was born in 1948.
A loose system of International Agreement.
Did not crystallize as an Institutional Framework.
The primary objective was to expand international trade by
liberalizing trade so as to bring about all-round economic prosperity.

Important Objectives:





Raising standard of living.
Ensuring Full Employment.
Developing full use of the resources of the world.
Expansion of production and international trade.
The GATT was transformed into WTO with effect from
January,1995.


WTO
 The main organ of implementation of the Multilateral Trade
Agreements (MTA).
 Forum for negotiations among its members.
 Basic principle is equal treatment to products and services of
multilateral trading system and equal treatment to products and
services for all other WTO Countries.
 Has very efficient dispute settlement body and Trade Policy Review
Body(TPRB)
 Directed by the Ministerial Conference that meets at least once every
two years and its regular business is overseen by a General Council.


Major Differences between GATT & WTO
GATT

WTO

Ad hoc and Provisional

Permanent

Had Contracting Parties

Had members

Allowed existing domestic
legislation to continue even if
it violated GATT Agreement

Does not allow this

Less Powerful,dispute
settlement system was slow
and less efficient.

More Powerful,dispute
settlement system is fast and
more efficient.


Functions of the WTO
 Facilitate the management of the Multilateral and Plurilateral
Agreements for the fulfillment of their obligations.
 WTO will facilitate implementation of the results of the negotiations
as decided by the Ministerial Conference.
 It shall administer the Understanding on Rules and Procedures
governing the settlement of disputes.
 It is responsible for administration of the Trade Policy Review
Mechanism forming part of the Agreement.
 It is the organ for establishing coordination with other Wings of the
UNO such as IMF, IBRD and its affiliated agencies.


Structure of the WTO
I.

The Ministerial Conference







The highest body
Composed of the representatives of all the members
The Executive of the WTO
Responsible for carrying out the functions of the WTO
Authority to take decisions in any matters under the relevant
MTA
It shall meet al least once in every two years




II.

The General Council



Executive Forum composed of representatives of all the
members.

Discharges the functions of the Ministerial Conference
(MC) during intervals between meetings of the MC.

It shall meet as and when necessary.

It shall establish its own rules of procedures and also
approve the rules of procedures for the Councils
established by it.
It shall also be responsible for:

The discharge of the responsibilities of the Disputes
Settlement Body as outlined in the Understanding on Rules
and Procedures governing the Settlement of Disputes
which form part of the MTA

The discharge of the responsibilities of the Trade Policy
Review Body


The Functional Councils under the
General Council and their functions
The General Council shall have three functional Councils
working under its guidance and supervision.These are:
a)

Council for Trade in Goods

b)

Council for Trade in Services

c)

Council for Trade-Related Aspects of Intellectual
Property Rights(TRIPS)


Functions of the three Councils
 The Council for trade in Goods shall oversee the functioning of the
Multilateral Trade Agreement relating to trade in goods.
 The Council for Trade in Services shall oversee the functioning of
the Multilateral Trade Agreement relating to trade in services
 The Council for trade related aspects of Intellectual Property Rights
shall oversee the functioning of the Multilateral Trade Agreement
connected wit Intellectual Property Rights and obligations, forming
part of the Agreement.
These Councils shall establish their respective rules of procedures
subject to the approval of the General Council.The Councils will meet as
and when necessary.


The Ministerial Conference and
Committees
The Ministerial Conference shall establish three functional Committees
for discharge of functions assigned to them under the MTAs. These
Committees are:
 Committee on Trade and Development
 Committee on balance-of-Payments Restrictions
 Committee on Budget, Finance and Administration
These Committees will also discharge functions specifically assigned to
them by the General Council. The Committees are open to
representatives of all members.


ANTI-DUMPING


Anti-Dumping Processing-Introduction
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




a.
b.

Dumping occurs, if a company exports its products at a lower
price than the normal price charged by it in the domestic market.
If the dumping injures the domestic manufacturers in the
importing country, the importing country may impose antidumping duties under certain circumstances to offset the effects of
dumping.
Sections 9,9A,9B and 9C of the Customs Tariff Act,1975 form the
legal basis for anti-dumping and anti subsidy investigations and
for the levy of anti-dumping and countervailing duties in India.
Anti dumping is a measure to rectify the situation arising out of
the dumping of goods and its trade distortive effect.
There are two requisites for determination of dumping:
Normal Value
Export Price






a.
b.





Normal Value is the comparable price at which the goods under
consideration are sold, in the ordinary course of trade in the
domestic market of the exporting country.
If the normal value cannot be determined by means of the
domestic means, the following two alternative methods may be
employed:
Comparable representative export price to an appropriate third
country.
Cost of production in the country of origin with reasonable
addition for administrative, selling and general costs and
reasonable profits.
Export Price of the goods allegedly dumped into India means the
price at which it is exported to India. It is generally the CIF value
minus the adjustments on account of ocean freight, insurance,
commission,etc.,
Margin of Dumping is the difference between the Normal Value
and the Export Price of the goods under complaint.


Difficulties in determining the existence of
dumping
 The Cost Structure in different countries may widely vary depending
on technology, the scale of production and other factor costs.
 There is multiplicity i.e. the network of import or export-the same
country importing from several others and the same country
exporting to many member countries.
 The dumping margin to be established requires the comparison
between products, which are identical i.e.alike in all respects or
closely identified to the product under consideration.
Therefore it is very necessary to translate different parameters and
indicators in financial terms to identify and determine the existence of
dumping. A Management Accountant is best suited to develop expertise
in these areas.


Fields for Practicing Cost Accountants

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