For some background, till 2011, financial record keeping was mandated by the Companies act-and so was their audit-for ALL companies. But the cost accounting record keeping, while mandated for most companies in an industry, was subject to audit only when a company specific order was issued. And this would typically only happen when the product/service in question was regulated, inflation sensitive etc.
Two MCA notifications(http://www.icwai.org/icwai/docs/cost-order-02052011.pdf and http://www.icwai.org/icwai/docs/cost-order-03052011.pdf) have mandated compulsary cost audit from the FY2011-12 onwards, for companies in specified industries fulfilling ANY of the 2 conditions below
- FY 2010-11 Revenues from ALL products/services=>Rs 1000 million
- Companies listed/in process of listing equity debt security on any stock exchange-in/out of India
- Bulk Drugs, Formulations, Industrial Alcohol, Fertilizers, Sugar, Electricity, Petroleum, Telecommunications(for these companies Revenues requirement slashed to INR 200 million OR a networth of Rs 50 million).
- Cement, Tyres/Tubes, Steel, Paper, Insecticides.
On the flip side, this may discourage the formation of inter disciplinary partnerships involving cost accountants, because now they have much more to lose if they permit other professionals to share in that initial lucrative pie for the first 7-8 years. It would be interesting to see the power equations reflected in such partnership agreements. Overall, I did feel that management accountants in India are quite understated. But with the quality of talent in the profession improving etc, they do deserve such professional opportunities now
On 30th Nov 2011, the Corporate Affairs Ministry issued a circular which substantially whittled down the scope of cost audit rules(http://members.icwai.org/members/docs/mca/CostAccountingRecord.pdf). So now is not the time to uncork the bubbly.