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Costing standards for footwear sector

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NEW DELHI, June 13

THE Institute of Cost and Works Accountants of India (ICWAI) has come out with Cost Accounting Standard on Classification of Cost, guidelines on Transfer Pricing and Cost Accounting Rules relating to footwear industry here today.

"The relevancy of costing system has increasing enormously with the Indian industries having to compete with the multinationals who started their operations with the latest technology and professional expertise. The globalisation has changed the perception of the management that costing system need be adopted in wider scale so that they are equipped with necessary tools and techniques to face the challenges of the competition,'' the President of ICWAI, Mr V V Deodhar, said.

ICWAI has undertaken the work of standardising cost accounting practices in India so that the cost of product manufactured in India could be compared with product manufactured in other countries. This will go a long way to help the Indian industry to contest the cases relating anti-dumping under WTO, he said.

The Cost Accounting Standard on Classification of Cost is the first in the series. The objective of this standard is to prescribe the classification of costs for ascertainment of cost of a product or service and preparation of cost statements on a consistent and uniform basis with a view to effect the comparability of the same of an enterprise with that of previous periods and of other enterprises.

Two other Cost Accounting Standards that are in the offing pertain to `Allocation of Overheads' and `Cost of Production for Captive Consumption'. These two standards are expected to be finalised in three months.

Further, the institute has also came out with guidelines on Transfer pricing. The book deals with different methodologies used for fixation of transfer price in a great detail. "This will facilitate the professional members of the Institute and the captains of the industries to accurately determine the basis of transfer pricing,'' Mr Deodhar said.

Besides, to assist the industry and professional members to implement the cost accounting record rules, ICWAI brought out booklet on cost audit in footwear industry so that proper compliance is ensured in the form of maintenance of cost accounting records rules and cost audit resulting into cost control, cost reduction and better capacity utilisation.

The Minister for Law, Justice and Company Affairs, Mr Arun Jaitley, released the booklets here today.

The Cost Accounting Standard Board under the chairmanship of Mr Chandra Wadhwa, Central Council Member of ICWAI, has compiled these books in the form of guidelines.

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