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FIELDS FOR PRACTICING COST ACCOUNTANTS 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: 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. Under EXIM Policy b. Valuation of Assets c. Under Excise Act d. Under FEMA e. Under Companies Act f. Under Regulatory Authorities g. Under Anti-Dumping Regulations h. 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. Statutory and Specific Fields: a. Audit b. Taxation c. Corporate Laws d. Certification e. Insurance f. Empanelment II. Non-Statutory and General Fields: a. System design, Installation and Operation b. Techno-economic Study c. Services to Banks, Insurance Companies and other Financial Institutions d. Financial Management e. Project Consultancy f. Tax Planning g. Materials Management h. Management Accountancy i. Investment Counseling and Portfolio Management j. Diagnostic Accounting and Revival of Sick Units k. Internal Management and Operational Audit l. Organizations structure Review 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 Does not allow this legislation to continue even if it violated GATT Agreement Less Powerful,dispute More Powerful,dispute settlement system was slow settlement system is fast and and less efficient. 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 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 anti-dumping 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: a. Normal Value b. Export Price 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: a. Comparable representative export price to an appropriate third country. b. 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.
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