Include cost auditing in accounting practices, says ICWAI chief

Special Correspondent Hindu

HYDERABAD: The President of the Institute of Cost and Works Accountants of India, Kunal Banerjee, has urged the Government to incorporate cost auditing mechanism in company audits.

Second audit, as proposed by the Securities and Exchange Board of India (SEBI), should provide for a different approach by checking the efficiencies, costs and other activities, he said.

Addressing a press conference here on Saturday, Mr. Banerjee said the institute wanted the Government to set up a regulatory body, Accounting Oversight Board, to supervise auditing and accounting practices.

Operational eficiencies

Verification of operational efficiencies of all sectors that played a role in the country’s economy should be made mandatory. Only then, any malpractice could come under the radar of the disciplinary committee.

He made a strong pitch for the companies to move from corporate governance to enterprise governance practice that would encompass not just the financial performance but the overall efficiency of an entity.

Corporate governance

Corporate Governance was about how companies were directed ad controlled. Though compliance and conformance to regulations was essential, there should be a structure that supported the governance of a company.

“Move away from compliance governance to business governance. The practice should come out of the check-list mentality which leads to governance in letter but not spirit,” he said.

He also urged the Government to constitute a ‘quality review board’ to check if everything was going on well. Building competence and reducing wastages should become in-built in the accounting practices, said Mr. Banerjee. Vice-President of the institute A. S. Durga Prasad said corporate reporting system needed to be strengthened. Clause 49 of SEBI guidelines on listing agreements specifically mentioned about performance monitoring.

http://www.hindu.com/2009/02/08/stories/2009020855461300.htm