ICAI celebrating "Corporate Cost Management Week" in six key Indian cities
September, 10th 2014
The Institute of Cost Accountants of India is celebrating "Corporate Cost Management Week" during 8th to 13th September 2014 across country covering six major cities namely Hyderabad, Kolkata, Mumbai, New Delhi, Bangalore and Chennai on theme " Business Sustainability and Cost Management".
The objective of 'Corporate Cost Management Week' is to spread the message that Cost Management is essential irrespective of whether the company is operating in a competitive environment or not. Even when a Company does not operate in a competitive environment Cost Management enhances the productivity of the scarce resources and thus, improves the GDP of the country.
Cost management is a philosophy, an attitude, and a set of techniques to create more value at lower cost. In this fast space competitive scenario, Cost Management information increases customer value.
The event will have four technical sessions, which are as follows:
I. Total Cost Management.
Total Cost Management is a company-wide systematic and structured approach, which provides a holistic framework to control, reduce and eliminate costs, throughout the value chain. This process of managing the financial outcome of activities encompasses all operations, internal and external.
II. Augmenting TCM through Cost Audit.
TCM is a systematic approach to managing cost through life cycle of any organization. Cost Audit can be effectively dove tailed for improving effectiveness of total cost management program in an organization. The Cost Audit is a tool for assisting management in improving efficiency of operations, rationalizing costs, improving profitability and enhancing stake holders value.Investment in any sector depends on sustainability and growth opportunities.
Companies Act, 2013 aims to strengthen corporate governance by empowering the board of directors. The board of directors need an assurance from an independent agency about the integrity of cost and revenue information that is placed before it.
III. Activity Based Costing for Service Industry
Service companies have had problems coming up with decent cost accounting systems because
they have been modeling them after systems found in manufacturing firms. The problems with
this are that manufacturing firms place emphasis on valuing inventory, which service firms do
not have, and use standard costs calculated for direct materials and labor.
Nonetheless, service firms do need to know accurate costs for product profitability analysis.
They need to find out:
? Which products are profitable
? Which products should be emphasized
? Trends in product profitability over time
? Product costs as a basis for setting prices
IV. Value Added to Value Management - Role of CMAs
Recent years have seen a plethora of new management approaches for improving organizational performance: total quality management, flat organizations, empowerment, continuous improvement, reengineering, kaizen, team building, and so on. Many have succeeded-but quite a few have failed.
Often the cause of failure was performance targets that were unclear or not properly aligned with the ultimate goal of creating value. Value-based management (VBM) tackles this problem head on. It provides a precise and unambiguous metric-value-upon which an entire organization can be built.
Value is created only when companies invest capital at returns that exceed the cost of that capital.
CMAs provide strategic information and analytical support to the management of an organization for creation, preservation and enhancement of the stakeholders value.