In my previous article titled –Affect Of Removal of Cost Audit In Various Industries, I got couple of queries about the value of cost audit and cost methods compared to financial audit. Well I am not inclined to get into the long debate but only thing I would clarify if I don’t develop uniform costing methods then how different companies under on industry will formulate its pricing and costing. Moreover with the absence of costing methods, how you will a company will justify the pricing mechanism and its risk taking capability. If you don’t know what is opportunity costing and decision based costing models how a company will accept risk and would be able to measure to risk. NPV,IRR and the entire gamut of Financial Management has been derived from Cost Management. You are free to abolish cost audit and costing methods but how will you justify your foot print in the global market where cost audit and costing is highly valued. Next I find that few friends have found that only the part of cost audit practicing members would be affected and not the ones who are doing services. We’ll try to understand that if COST AUDIT & COSTING METHODS gets abolished why companies would recruit cost accountants and cost auditors in their company. The current situation is so pathetic that 500000 students and all the members and non members employed will be jobless within a year’s time frame depending upon the present Draft Guidelines.
Coming back to the industries which are abolished for COST AUDIT and COSTING METHODS applicability are as follows.
It seems that if cost audit and costing methods are removed then a it would be very easy for countries like China, US and UK to dump their goods in the Indian markets. Since without any proper costing mechanism, a time will come when everyone would start adopting different costing methods to save taxes and resulting increase of prices to make windfall profit. When prices of domestic products would increase then imported products prices would be less compared to the domestic ones and hence dumping of goods would happen in India. Slowly the foreign reserves of the country would deplete in the long run and fiscal deficit of India would increase. By removing cost audit and costing methods, India in the long term will no longer be in the race of global competitive market. I find that through this removal the broader picture is that many countries don’t want India to grow and hence the best way is to eradicate the cost competitiveness of Indian economy. Those who have planned for the removal of cost audit and costing methods their target is to destroy the Indian markets in the long run and let foreign players sell their product in India and exploit the resources of Indian economy. If cost audit & costing methods are removed then down the line next 5 to 10 years India would be like US where made in china goods are being sold replacing the same US based companies. In simple words Indian companies would exit India and would manufacture in other economies and sell the same goods through import in India. The master plan is quite dangerous.
A special thanks to CMA Vijendra Sharma and CMA Amit Apte for their support and inputs on the same. Without their help I should not have been able to write the same.
Global Macro Economic Researcher and Business Strategist
Master of Economics, MBA in International Business Management, ICWAI (Final)/CWM Final/Journalist
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018