K C Verma, New Delhi Companies Bill
The working draft of the Companies Bill 1997 is likely to come up for debate in parliament shortly. It is unfortunate that the draft bill presented to the parliament retains almost all the flaws identified in the groups maiden effort.
A gross omissions has been made in Section 193 of the proposed Bill according to which audit of cost accounts will be merely voluntary depending on the whims of the companies concerned. On the other hand, under porposed Section 166(1) (d) maintenance of cost accounts is mandatory for specified classes of companies and non-compliance with this section will attract penal provisions of six months imprisonment or a fine of Rs 10,000 or both. Then who is to ensure that such cost accounts have been maintained unless cost audit is made mandatory? Under the existing Act, cost audit is mandatory under section 233B. The removal of this mandatory cost audit will bring disaster not only to the Indian Industries but also to the economy.
Threre is another important point relating to accounting standards which has been overlooked in the Companies Bill. Under the proposed section 155 (1) (d) read with Section 166(3), particulars of costs as well as accounting thereof, which have double entry accounting system. Obviously, the cost accounting standards involved is a part of accounting standards which can not be decided by the Institute of Chartered Accountants of India (ICAI) alone, cost accounting and cost audit being an exclusive area earmarked for cost accountants and their institute - The Institute of Cost and Works Accountants of India (ICAI). This is an absurd anomaly which has to be resolved by constituting a national accounting standard board having representation from ICWAI, ICAI as well as chambers of commerce and stock exchange authorities.
Hopefully, the Parliamentarians will resist quick clearance of the Draft Companies Bill 1997.
