In Delhi, the Officials from the Income tax department said that the panel of cost accountants will work to check the correctness of the tax returns. The tax calculations include inventory and price fluctuations. The cost audit brings correctness to the tax calculations. The government want to have a monopoly market in some industries. The government also encourage a self-regulatory free market. The demand, supply and social welfare control the free markets. Competitive markets depend on price changes and profit-making. In an economy with moderate growth, a free market system brings equality. Capitalism insists on private ownership, personal income, per capita income, profit motive, minimal government regulation, and more competition. In a country with high development, competition, profit motive, personal income, and high tax revenue are growth factors. In a developing country like India, a free market and equality lead the population towards growth.
In countries with capitalist policies, cost accountants work to control the competition and price fluctuations. In countries with a free market system, there is less demand for cost audits. According to a report, more than ten thousand product brands are operating in the digital space. The start-up Unicorns and digital space are increasing the competition in the Indian market. The digital space is increasing the supply and also making the market price-sensitive. So, Indian markets should prepare for a free and competitive market. Competitive markets enhance growth. And free markets enhance the stability of growth. Companies not expecting subsidies from the government operate in the free market. If there is competition, price sensitivity, and demand, the government intervene in the operations with regulatory bodies. A cost audit is essential for controlling competition and price fluctuation. The blog reveals the industries with cost audits, the benefits of cost audits and famous cost accountants from India.
Industries with cost audit:
In India, individual products with a profit of 25 crores and total products and services with a turnover of 50 crores should produce the cost audit report. Cost audit is essential for the mining, manufacturing and service industry. Cost audit provides a clear picture of the profit margin, inventory valuation and production cost. Cost audits help the companies to understand the cost reduction with labour, material and overheads. Cost audit helps in working with projected financial figures. Cost audit directs the resources towards the business objectives. Companies operating in the regulated sector requires cost audit. Companies operating in the non-regulated sector are under the government control. These industries do not require cost audits. The non-regulated sectors are machinery, mechanical appliances, space, atomic energy, defence, port services, hooking, mooring, steel, rubber and allied products, and other machinery.
Benefits of cost audit:
Statutory audits, tax audits, secretarial audits, internal audits, external audits, cost audits, financial audits, software audits, performance audits and forensic audits are the different types of audits in India. A cost audit is an internal audit for specific periods, products and operations. Cost audit is for controlling the cost, and enhancing operational efficiency.
The following points explain the importance of cost audit.
- Cost audits enhance resource management.
- Cost audit control the wastage.
- Cost audit improves the data management system.
- Cost audit increases the production.
- A cost audit compares the financial figures. Financial audit calculates the day-to-day operations. A cost audit compares the operations and decides the method to reduce the expenditure.
- Cost audit determined the value of the stock.
- Cost audits allocate the responsibility to the various departments. The staff performance improves by the cost audit. Cost audits make the authorities responsible and goal-oriented.
Popular cost accountants from India:
Chartered accountants do Individual practice and jobs. Cost accountants run management consultancies and pursue jobs. As there is high competition in the Indian commercial market, the role of cost accountant is gaining value. Chartered accountants focus on tax revenue and social welfare. Cost accountant’s job is associated with the competition. Here are some inspirational personalities with CMA qualifications.
Mr. Srinivasan Vaidyanathan is the chief financial officer of HDFC Bank. He has an All India Rank in Chartered Accountancy. He is an MBA graduate. He is a member of CMA, USA. He has vast experience in Citi Group and HDFC Bank. He is the finance and deputy treasurer of the Citi group. He contributed to the financial control, planning, MIS, treasury reporting, expense control and treasury report analysis.
Mr. Jatin Dalal worked as the chief financial officer of Wipro. At present, Aparna Iyer is the CFO of Wipro. She took her responsibilities effective from September 22. Mr. Jatin Dala is a chartered accountant, cost and management accountant, chartered financial analyst and chartered global management accountant. His qualifications are from India and the UK. He holds membership with various committees and is a trustee of the Wipro Foundation. He served for Wipro’s internal shared services and Global IT business.
Around the world, most economies follow the rule of a free and competitive market. Singapore follows a free market. After Singapore, Switzerland and Ireland are on the second list. The United States is holding the 25th place in the free market system. Venezuela and North Korea are more on the side of competitive markets. They are ranked last in the free market according to a report from 2022. The free market is distributing goods and services according to the demand. The price depends on the market demand. The supply depends upon the market demand. It promotes equality. In a competitive environment, government spending and regulation are essential for a capitalistic policy. Competitive markets enhance the quality of products and services. In India, the economy is a mix of free and competitive markets, cost accountants play a vital role in growth. Cost accountants indulge in inventory reports, cost audit reports, price strategies and budgets. Regulatory bodies are increasing the value of cost accountants for the internal and external growth of the companies.