| The job assigned to the ICWAI is not a post-mortem examination of income and expenditure of tea companies but essentially some kind of a live-auditing.
GARDENS UNDER audit. K. K. Mustafah
The issue of a directive by the cost audit branch, Ministry of Company Affairs (MCA), to the Institute of Cost and Works Accountants of India (ICWAI) for mandatory audit of 38 large tea estates under sub-section (i) of Section 233B of the Companies Act, 1956 is welcome.
Roughly, the audit will cover some 200 tea gardens from among the 1,600 estates. But in terms of area under the crop, the audit inquiry will take into account over 40 per cent of aggregate acreage under tea. The erstwhile ICWAI president, Mr Pravakar Mohanty, in one of his last communiqus had reminded the cost accountant community that the scope of cost audit had widened vastly even to include public utilities and services such as power, telecommunications as well as the agro sector like tea/coffee plantations.
Change in cost audit
Indeed, the importance of the cost audit system has undergone "a metamorphosis" in the era of globalisation and liberalisation, as transparency is a must in the new ambience. So, both the ICWAI and the profession it monitors have to take on the challenge. For the professionals, registered as associates or fellow members with the ICWAI, this is a new challenge. Aspects that the statutory audit will cover include eliciting data and information on `costs' and monetary profitability rather than physical productivity factors which are a reflection of the health of an industry.
Incidentally, there is a misconception in a section of the financial media that the MCA wants another type of audit, different from the statutory audit done by chartered accountants.
The job assigned to the ICWAI is not a post-mortem examination of income and expenditure of tea companies but essentially some kind of a live-auditing.
The quality of service delivered by cost accountants is often questioned but there are instances of efficacious cost study.
In 1993, the ICWAI did a commendable study on the railway fare and freight restructure. The Railway Fare and Freight Committee (RFFC) had proposed that 40 suburban routes, such as Joginder Nagar-Pathankot, Shimla-Kalka, Guntur-Vijaywada-Machhilipattam, Miraj-Hubli, Veraval-Rajkot, Bakhtiyarpur-Rajgir, Katihar-Jogbani and Burdwan-Katwa, be abolished on the plea of rampant ticket-less travel.
The ICWAI made a critical analysis to refute the proposal. The RFFC prescription, apart from leading to retail prices of essential commodities going up, would `seriously jeopardise' daily supply of vegetables and affect hundreds of growers, the ICWAI critique said. But there are instances of bad cost study too.
For instance, in the mid-1980s, the ICWAI suggested that the Delhi Transport Corporation increase sundry debtors to improve working capital management. In other words, daily tickets might be sold on credit. How financial scribes missed such an absurd suggestion is a mystery. Professional apex bodies such as the ICAI and the Institute of Company Secretaries of India (ICSI) are not free from aberrant instances either.
Social costs and benefits
There is no dearth of such professional deviations. The repeated assertion by the tea lobby, through the Consultative Committee of Planters Association and the United Plantation Associations of South India, that factors such as labour wage including `social costs' threaten the commercial viability of tea estates will be under the scanner of cost audit.
Academics have serious reservations about tea companies blaming workers. Prof Sharit Bhowmik, professor and head of department of sociology, University of Mumbai and a pace-setter in socio-economic investigations of tea estate labour, rejects the exaggeration of social cost by the large tea companies.
"Social benefits mainly 4.50 kg of cereals a week for every adult tea garden worker as a component of monetary wage in Assam and West Bengal converted into equivalent rupees plus weekly average wage is still below what a tea estate worker gets in South India," Dr Bhowmik told this writer a couple of years back.
Mr Samar Chakraborty, secretary-general, West Bengal branch of Indian National Trade Union Congress and president Tea Board Workmen's Association, welcomes the cost audit order.
"A proper cost survey will prove that tea industry associations and large tea company CEOs blow up social cost out of proportions Tea garden labour leaders, crossing party lines should be on vigil so that cost accountants, engaged by the ICWAI, get true cost data," the septuagenarian labour activist and quasi-academic said.
Sankar Ray
(The author is a Kolkata-based freelance writer.)
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