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ICAI (CMA) presents global practice of costing to MCA Expert Committee, will MCA accept?

First of all, GOI and MCA have to take a call for setting up policy for compulsory cost audit once again in India. And ICAI (CMA) needs to provide all the required inputs for re-assessment of requirement of statutory costing and cost audit in Indian Business. It  is presumed that all the stake holders to costing profession takes note of current happening to costing profession in India and all global happening with costing profession across the world and its impact on the same on India costing profession. I have tried to put factual information on the presentations made by the ICWAI as following for better clarity of the subject matters;

1. Japanese CMA Practices:

Japan does not have any compulsory costing practice for its Business. Even terming costing as CMA is not mandated by any law of Japan. It is self-terming by ICWA on replication of its own name. Originally, costing was compulsory to some of manufacturing firms, but later on it become completely voluntary compliance activity by Japanese firms.

Though Japanese business has developed advanced tools of costing and management accounting themselves, it does not have any separate costing body like ICWA or CIMA to regulate this profession. Currently, Japanese Institute of Certified Public Accountant (JICPA) is serving all the accounting and audit services in the Japan.

2. Chinese CMA Practices :

China does not have any policy for compulsory costing for industries in any manner. Even Chinese CMA is self-termed by ICWAI. There is no any legal back to use “Chinese CMA” in China though advance form of costing and management accounting has been devised by chines business as mere internal function only. Chinese Institute of Certified Public Accountants (CICPA) like ICAI India (CA India) is sole body to regulate entire domain accounting. There is no segration of Cost Accounting and general Accounting in Chinese laws. Hence, we can say there is no existence of separate costing profession in China. Chinese authority has classified CPA into two parts one working for Business and another working in public practice.

3. Korean CMA practices :

Though to the some extent, some companies were made compulsory to comply with only costing standard and costing system policy issued by Korean Government, but no such separate law was framed to regulate costing as separate profession than accounting profession. Formal education of costing and management accounting is given in management schools and colleges. Korean Institute of Certified Public Accountants (KICPA) is sole body to regulate all accounting functions including costing. There is no any distinct professional body to regulate costing in Korea.

4. CMA practises of France :

Though uniform costing system has been devised by France across some selected Industries, no separate body for regulation of costing in Industries has been set up. Costing of products and services has been embedded in financial accounting system and the compliance of the same is ensured by audit report given in company audits. France does not have any law to regulate profession of costing and cost audit separately rather the same has been centrally functioned by financial Accounting system of Business.

5. German CMA practices :

Germany has one of robust costing and controlling system for its business and industries .But the costing compliance is fully voluntary to the business firms themselves. The world top Business application Software SAP is based on advanced tools of costing and management accounting, but this is all internal function for industries and services sectors which is always customised according to needs of Industries specific. Prices of some strategic goods are regulated by German government, but the same has no things to do with any type of compulsory cost audit in Germany.

6. UK CMA practices:

UK is only place in the world where “CMA “has got its origin and got royal charter also to give legal form to CMA. But as of now, there is no any compulsory costing and its audit in UK.

Even CIMA, which is supposed to forefather of entire CMA bodies around the world, have left all statutory audit functions to CA/ACCA to make it different from public accountants (CA/ACCA).

While on the other Hand, UK Business has discovered so may advance tools of costing and management accounting themselves and devise the same as internal function in their finance department. They are not subject to any compulsory cost records and cost audit in UK.

Moreover, CIMA UK has recently entered in joint venture with AICAP (CA US) to confer CMA designations to all CPA having work experiences in management accounting. So, CIMA (Principal body of costing) understands that any accountants/MBA graduates working for management accounting can be provided CMA designations without further any skill assessment or limited assessment of relevant experience obtained by a candidate.

7. USA CMA Practices:

Though there is a voluntary private organisation (called The Institute of Management Accountants, IMA) for development of costing and management accounting in USA,   there is no existence of any compulsory costing and cost audit in any part of US.

AICPA is statutory body for regulation of accounting in USA fully ,which provides accounting services functions to USA.CMA US has no any such statutory recognition like CPA who renders public accounting as well management accounting. IMA has kept itself unique as an association of Accountants in finance and Business.

US Govt has maintained some compulsory costing guidelines for those business organisations in which federal supplies and procurements are involved.

8. Canada CMA Practices:

One of the world oldest and influential costing bodies as CMA Canada existed till 2012 .Now ,costing and management accounting as separate profession is nowhere in Canada. CMA Canada merged with CA/CGA for single Accounting designation in Canada, which is called “Chartered professional Accountants. “Even before merger of costing profession with financial accounting, there was no compulsory costing and cost audit in Canada.

Conclusion: ICWAI has presented global practise of the above countries to MCA, but these countries do not any kind of statutory costing and cost audit and MCA may ask CWA to present only those countries having legally backed costing and cost audit. Statutory cost and cost audit are at present exiting in some SAARC countries only. Out of the world 197 countries, only some few countries (two or three) are now regulating costing as separate accounting profession.


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Category Others, Other Articles by - CA.Raj Kumar Gupta 



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