Members

Handbook

TheInstituteofCostAccountantsofIndia(StatutorybodyunderanActofParliament)

FirstRevisedEdition:5thJanuary,2011

SecondRevisedEdition:July2011

ThirdRevisedEdition:January,2013

PublishedBy:

ThePresidentTheInstituteofCostAccountantsofIndia

CMABhawan12,SudderStreet,Kolkata700016

DelhiOffice

CMABhawan3,InstitutionalArea,LodhiRoad,NewDelhi110003

Price:Rs.500

TheInstituteofCostAccountantsofIndia

AllRightsReserved

Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted,inanyform,

or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior

permission,inwriting,fromthepublisher.

Anymistake,errorordiscrepancynotedmaybebroughttonoticeofPDDirectoratewhichshallbetaken

careofinthenextedition.

CMARAKESHSINGHPRESIDENT

THEINSTITUTEOFCOSTACCOUNTANTSOFINDIA(StatutorybodyunderanActofParliament)

H.Q.:CMABhawan,12,SudderStreet,KolKata700016Phones:913322521031/1034/1035Fax:913322527993/1026Email:president@icwai.org,Website:www.icmai.in

FOREWORD

I am happy to note that the Professional Development Committee is bringing out 3rdedition of

Members Handbookafter incorporating the latest developmentsin India with respect to

regulatoryframework.AsmembersareawarethattheMinistryofCorporateAffairsissuedseriesof

notifications/circularsmodifyingtheprocedureofappointmentofcostauditorby thecompanies,

principlebasedcostaccountingrecordsrules2011,revisedcostauditreportrules2011andfilingof

Cost Audit Report and Compliance Report in XBRL Format following costing taxonomy. Further,

MinistryofCommerce&Industry,DirectorateGeneralofForeignTrade(DFGT)acceptedtheroleof

cost accountants in EXIM Policy and Procedures and authorised them to certify all formats and

statements of Foreign Trade Policy and Procedures. All these developments necessitated

updatationintheMembersHandbook.

I also acknowledge the relentless contribution of CMA J.K. Budhiraja, Director (Professional

Development)andallthestaffmembersofProfessionalDevelopmentDirectorate inthecourseof

preparingandupdatingthispublication.

I thank CMA S.C.Mohanty,Vice President of the Institute, CMA Sanjay Bhargave, Chairman and

othermembersoftheProfessionalDevelopmentCommitteefortheircontributions inbringingout

MembersHandbook.

IamsurethattheMembersHandbookwillprovetobeveryusefultomembers inpracticeand

employmentandalsotostudentsoftheInstitute.

(CMARakeshSingh)

President4thJanuary2013NewDelhi

(ThirdEdition)

CMASANJAYR.BHARGAVECHAIRMANPROFESSIONALDEVELOPMENTCOMMITTEE

THEINSTITUTEOFCOSTACCOUNTANTSOFINDIA(StatutorybodyunderanActofParliament)H.Q.:CMABhawan,12,SudderStreet,KolKata700016Phones:913322521031/1034/1035Fax:913322527993/1026Website:www.icmai.in

PREFACE

ProfessionalDevelopmentCommitteehasbroughtoutMembersHandbookinJanuary2011.TheMinistryof

CorporateAffairs issued series of notifications/ circulars on CostAccounting Records Rules 2011 and Cost

AuditReportRules2011andclarificationsthereonintheyear201112.Also,duringtheyear2012theMinistry

ofCommerce& Industry,DirectorateGeneral of Foreign Trade (DFGT) after considering the request of the

Institute, issued PublicNotice inOctober 2012 authorizing the cost accountants to certify all Formats and

Statements at par with our sister Institute. Telecom Regulatory Authority of India (TRAI) also revised its

Accounting Separation Regulations through The Reporting System on Accounting Separation Regulations,

2012andtheFertilizer IndustryCoordinationCommittee(FICC)alsochangedthesystemofRetentionPrice

Subsidy Scheme. There were other changes in the regulatory framework, which required updation in

MembersHandbook.Iampleasedtomentionthatallsuchchangeshavebeen incorporated intherevised

editionof MembersHandbook. The earlier editionsof MembersHandbookhavebeenofgreatuse for

memberandstudents.

ThishandbookcoverscomprehensivelyallmaterialswhichaCostAccountant is required toknowabout the

Institute.ItincludesbriefabouttheInstitute,MOUsenteredintobytheInstituteswithotherbodies,important

provisions of Cost andWorks Act and Regulations 1959, Code and Ethics, career and prospectus as Cost

Accountants,practisingareasundervariousGovernmentDepartments,MinistriesandRegulatoryAuthorities,

ActsandProvisionsofCompaniesAct,IncomeTaxAct,VATActsetc.Inadditiontomaterialthatwaspreviously

published in theMembers'Handbook, this third editionbridges thegapbetween thepreviouseditionsand

includesupdatedinformationonallsuchareasmentionedabove.

IwouldliketoconveymysincerethankstoPresidentCMARakeshSinghandVicePresidentCMAS.C.Mohanty

forprovidingguidanceandableleadershipintheaffairsconnectedwiththePDCommittee.

IwouldliketoacknowledgethecontributionsofmembersofProfessionalDevelopmentCommitteeenablingto

bringoutrevisedandupdated3rdEditionofMembersHandbook.

IwouldalsoliketoacknowledgetheuntiringeffortsofCMAJ.K.Budhiraja,Director(ProfessionalDevelopment)

andSecretaryandhisteamtobringthehandbookinthepresentform.

IamconfidentthatthisHandbookwillbeextremelyusefultothemembersandstudentsoftheInstituteand

othersinterestedinthesubject.

(CMASanjayBhargave)Chairman

ProfessionalDevelopmentCommitteeNewDelhi4thJanuary2013

(ThirdEdition)

B.M.SHARMA THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA PRESIDENT (Established by an Act of Parliament) 12, Sudder Street, Kolkata-700016 Phones:91-33-2252-1021/34/35.2252-1602/1492 Fax: 91-33-2252-7993/1026 E-mail: president@icwai.org Website: www.icwai.org

Foreword

The Institute of Cost and Works Accountants was born as a limited company in 1944, to assist the Governments desire for checking valuation, costing and pricing after war. The Cost and Works Accountants Act was passed in 1959, as an Act of Parliament, and the ICWAI was born as a statutory body to promote, propagate and regulate the profession of cost accounting in the country.

ICWAI has since then grown from strength to strength and today it functions all across the country and has an active presence in all the Internal Accounting Bodies. ICWAI, being a professional Institute, is providing support to the Nation in academic excellence, knowledge-sharing and exploring their intellectual capital for socio-economic development. Today we have 4 regional councils, 91 chapters, 6 overseas centers, three centers of excellence, with the headquarters at Kolkata, catering to the needs of the members, occupying eminent positions in government, industry, academic world, and regulatory bodies. ICWAIs constant endeavour is to equip members both in service and profession so as to serve the Nation. The members strength of ICWAI has also shown a remarkable growth, crossing 55,000 in this year.

I am happy to note that, as a continuation of this endeavour, has come out with this enlarged publication, titled Members Handbook, which shall be a first hand information for the members of our esteemed profession. I also congratulate all the staff members of the Directorate of Professional Development and Directorate of Studies for their relentless efforts and contribution in the course of preparing this publication. I hope that this publication will be useful reference to the Cost & Management Accountants.

With Best wishes,

B.M.Sharma

President

5th

day of January, 2011

(First&SecondEdition)

KUNAL BANERJEE THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA Chairman (Established by an Act of Parliament) 12, Sudder Street, Kolkata-700016

Professional Development Committee Phones:91-33-2252-1021/34/35.2252-1602/1492 Fax: 91-33-2252-7993/1026 E-mail: banerjee.kunal@gmail.com Website: www.icwai.org

Preface

I have the pleasure in introducing Members Handbook a ready reference for the members of the Institute both in practice and service. This handbook is divided in three volumes.

I have always been of the opinion that the cost and management accounting profession has a very important role to play in the economy. The increasing recognition for our professionals in different spheres of economic activity bears testimony to this fact. Our profession has an excellent window in terms of creating these services which will meet the need of the hour with the focus on enterprise governance with application of appropriate cost management tools and techniques, better and transparent reporting and providing a platform for serious examination of the risks of inadequate information.

In the changed economic environment the emphasis is shifting to efficiency review. Regulatory apparatus needs to foster efficiency and investment by eliminating outdated restrictions and promoting sustainable growth. Regulators are required to frame right regulations in the interest of the industry as a whole and also in the interest of the consumers and other stakeholders. Cost audit, supported by cost accounting standards, can provide relevant and credible cost and revenue data to the regulators to support their decisions. The economic crisis shows that businesses run on solid fundamentals with clear assessment of profitability and liquidity requirements across different business segments will be able to sustain as well as enhance shareholder value. The management accountants major role will be in application of appropriate tools and analysis of business decisions for corporate sustainabilit