- Govt of India, Ministry of Corporate Affairs and Indian Parliament
JUSTIFICATION FOR CHANGE OF THE NAME OF THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA TO THE INDIAN INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS
The country has achieved a unique place in world fraternity due to its growth in socio-economic development. Indian professionals have also
displayed their competence to head top global organization in almost all fields including science, technology, economics and accountancy.
The Government of India has gradually upgraded the Department of Company Affairs which was only a Department of Ministry of Law, Justice and Company
Affairs (or part of Finance Ministry), to the Ministry of Company Affairs under the independent charge of Hon'ble Shri Premchandji Gupta as Minister
of State, raised it as a Cabinet Minister and recently the Ministry of Company Affairs has been appropriately named as Ministry of Corporate Affairs.
We are grateful to the Hon'ble Minister Shri Premchandji Gupta for taking visionary initiatives in corporate world like:
Ø Concept Paper on Company Law;
Ø Introduction of Bill on Limited Liability Partnership;
Ø Implementation of MCA 21;
Ø Introduction of Concept Paper on "Council of Valuation Professionals of India";
Ø Setting up of "Indian Institute of Corporate Affairs";
Ø Changing the age-old name of the Ministry from "Company Affairs" to "Corporate Affairs" keeping in view the country's growth and universal presence in the third millennium
BRIEF HISTORY OF ICWAI
The Institute was founded as a company during Second World War in 1944 mainly to assist the Government in examining war contracts and cost of goods procured by the Government. After Independence, the country adopted
socialistic pattern of society to ensure balanced economic development in all the regions and distribution of national wealth. The country started
First Five Year Plan and felt the need for efficient and optimum use of scarce economic resources. In this context, the company – Institute of Cost
and Works Accountants of India was given statutory recognition by passing the Cost and Works Accountants Act in 1959.
In early 60s, the Government decided to audit the use of economic resources by corporate world as Vivian Bose Commission and Shastri Daftari
Committees pointed out diversion of resources for personal benefit. In 1965, the Companies Act was amended to incorporate provision for maintaining Cost
Accounting Records and later for Cost Audit.
Since then, a large number of Government or other organizations have cast responsibility on members of ICWAI in the fields of Excise and Customs,
Income Tax, Pharmaceutical pricing, Anti-dumping proceedings, Determination of subsidies, Awarding of contracts etc. The responsibility includes
verification and certification of important management decisions and performance like margins, productivity, value addition, social contribution, maximum benefit to consumers, international trade, etc.
OMNIPRESENCE OF MANAGEMENT ACCOUNTANT
The role of members of the profession which was originally envisaged to verify and determine cost of manufactured goods during Second World War has
been vastly enlarged to cover assistance in framing the strategic decisions for planning, execution and monitoring of improvement in operational
efficiency in all fields like financial resources, human resources, material management, production management, research and development, logistics,
marketing management, and perspective development for further growth. The Management Accountant has become an indispensable member of the top
functionaries for continuous decision making. Therefore, the world over the Cost Accountants are now known as "The Management Accountant". Their role is
not restricted to manufacturing sector but has large need in the service sector like telecommunication, health and education, banking and insurance,
financial services, rural development, transport, infrastructure development etc.
DEFINITION OF A MANAGEMENT ACCOUNTANT
According to the definitions of Chartered Institute of Management Accountants, U.K., the Management Accounting is an integral part of management with identifying, presenting and interpreting information used
Ø formulation of strategy;
Ø planning and controlling activities;
Ø decision making;
Ø optimizing the use of resources;
Ø disclosure to shareholders and other external to the entity;
Ø disclosure to employees;
Ø safeguarding assets.
ROLE OF INDIAN COST ACCOUNTANTS
Members of ICWAI, apart from being involved in the statutory audit and certification, are greatly engaged in the following field of practices,which are in the nature of Management Accounting:
Ø Management Audit for different functional areas for effective resource planning and control
Ø Strategic decision making in business operations
Ø Financial planning- raising and allocation of funds
Ø Project consultancy
Ø Developing system for optimum use of business resources
Ø Developing Management Information Systems
In India a good number of members of the Institute have excelled in the profession of management accounting in the form of strategic decision making
at different levels of business operations and many are holding highest position of Chief Executive Officer/Chairman and Managing Director/Director
(Finance) in public and private sector.
Name Change by overseas bodies
With the growth and advancement of the profession and change in the dimension of the services rendered by them the counterpart Institute in UK,
has adopted the name as Chartered Institute of Management Accountants twenty years back. Our neighbouring countries like Pakistan, Sri Lanka and
Bangladesh have also changed the names of their Institutes as the Institute of Management Accountants of Pakistan, Institute of Management Accountants
of Sri Lanka and the Institute of Management Accountants of Bangladesh respectively.
Membership of International Bodies
The Institute is a member of the International Federation of Accountants (IFAC), The Confederation of Asian and Pacific Accountants (CAPA) and The South Asian Federation of Accountants (SAFA). In IFAC, the Institute had been represented in the Financial and Management Accounting Committee & Compliance Committees and in CAPA in the Executive Committee. Its nominees have been President of CAPA and SAFA also.
RECOMMENDATION OF THE STANDING COMMITTEE ON FINANCE OF PARLIAMENT IN ITS TWELFTH REPORT DATED 23RD FEBRUARY, 2005
The Institute has been requesting for changing its name for a very long time. The aforesaid Committee had kindly recommended to change the Institute's name to the Institute of Cost and Management Accountants of India as under:
"11. The Committee take note of the suggestion of ICWAI regarding the change in nomenclature of Institute of Cost and Works Accountants of India
to the Institute of Cost and Management Accountants of India. The Committee are appraised with the following justification in favour of the change in
Ø Positive leverage in Mutual Recognition Agreements (MRAs) in GATS
Ø Preserving national interest in Anti-dumping cases
Ø Image building of Institute in international platform strengthening
prospects of professional members.
Ø To promote the case of national interest in having due share in trade of management accountancy services in the world in open competition."
"12. The Committee also consider the Government's reply in this regard wherein they have stated that an other sister organization, ICAI is opposed
to change of nomenclature as the use of world `Management' would create confusion. However, the Committee note that the Government are not averse to
change in nomenclature. The Committee therefore, recommend that the nomenclature of Institute of Cost and Works Accountants of India should be
the Institute of Cost and Management Accountants of India."
It may kindly be noted that the Institute of Chartered Accountants of India had opposed this proposal, based on a very old definition of Management Accounting provided by the erstwhile Institute of Cost and
Management Accountants, London (now known as CIMA – Chartered Institute of Management Accountants) that describes Management Accounting as collection,proposition, processing and dissemination of accounting and economic information that can aid management. In that case also, such collection and
dissemination, etc. themselves constitute a separate discipline not belonging to the fields of Chartered Accountants.
In 1958 while introducing the Cost and Works Accountants Act, the then Deputy Minister of Finance and Industry, Government of India, observed as
"Cost Accounting is a function entirely different from general or financial accounting. Cost Accountancy covers a wide range of subjects, with
special emphasis on cost accounting, factory organisation and management,engineering techniques and knowledge of the working of the factories. The
cost accountant performs services involving pricing of goods, preparation,verification certification of cost accounts and related statements, or recording presentation or certification of cost facts or data. In a
manufacturing concern, he works out the economical cost of production and evaluates its progress at each stage of production. In mass production enterprises, he points out wastage of manpower due to overstaffing or
inefficient organisation and indicates the output, the capacity of the machines and labour, the stock position, the movement of stores and weaknesses in the production process. The systematic determination of cost in every single and distinct process of manufacture
provides continuous check on the margin or waste in the processing of raw and semi-finished materials on the utilisation of machinery installed, on manpower expended and the percentage of rejection of finished products. This pinpoints also the particular process in which defects and deficiencies exist, thereby enabling immediate remedial measures being taken. Costing, in
short, aims at making the organisation efficient and economical, by providing the minimum of labour and material and getting the full capacity
of the machine output. The cost accountant, therefore, is concerned solely and mainly with the internal economy of the industry and renders services
essential to the day-to-day management of the undertaking". (Lok Sabha Debates, Vol. XXIV, dated 20th December 1958, pp. 6608-09)."
It may be observed that the Chartered Institute of Management Accountants (CIMA) in their 1995 literature defined the role of management
accounting as follows:
Ø to produce meaningful information, which can be used to determine whether resources are being used, efficiently, and whether the various activities of the business provide value for money?
Ø to design and manage the systems (including the technology) which produce the information
Ø to play an active role in the management team ensuring the effective formulation of strategy, planning, budgeting, financial management and control of the organisation
Ø to review systems and operations and make recommendations for their improvement
Ø to manage change within organisations.
The Institute of Cost and Works Accountants of India is the only Institute in India that has in its syllabus and training contents the proper blend of cost, management accounting, finance and non-finance subjects
required for professional management accounting functions. Needless to mention that in the Finance and Management Accounting Committee of the
International Federation of Accountants – earlier known as FMAC and now known as Professional Accountant in Business Committee – ICWAI was represented since its inception and not ICAI.
Cost Accountancy (as it is known in India and represented by ICWAI) has evolved into management accountancy over the years, which has its logical
outcome. In 1958 when the Cost and Works Accountants Act was introduced, the
lawmakers were fully aware of this aspect as the concept of management accounting was in embryonic form in the statement made by the Deputy
Minister of Commerce & Industry quoted above. Like the Institute of Cost and Works Accountants of India, which was first registered in 1944 as a company
under Companies Act by the name Indian Institute of Cost and Works Accountants as a guarantee company under the Companies Act, the Institute of
Cost and Works Accountants in UK was registered in 1919 as a guarantee company under their Companies Act.
Subsequently, the Institute in UK changed its name to the Institute of Cost and Management Accountants in 1972 and then to Chartered Institute of
Management Accountants in 1986 whereas the name of the Institute of Cost and Works Accountants of India (ICWAI) could not be changed to reflect the true
nature of functions and earnest desire of the members of the profession of ICWAI. All other Institutes of Cost Accountants in the world, including
those of Bangladesh and Pakistan, are known as Institutes of Cost and Management Accountants with far less number of members in comparison to
those of ICWAI. In our earlier communication dated 2.9.2003 we forwarded the observations of CIMA and of the Chairman of the Financial and Management
Accounting Committee of the International Federation of Accountants vide their letter dated 25.6.1996 written to the Additional Secretary, Government of India, substantiating the move of the ICWAI for change of its
name. Moreover, it is high time that the ICWAI is facing rough weather for changing its nomenclature for
the last few decades. The change of nomenclature is also likely to attract the outside world in its own fold for furtherance of the cause of the profession for which it stands.
The Institutes in other countries have changed their names. Our neighbouring countries like Pakistan, Sri Lanka and Bangladesh have their names as
Ø The Institute of Cost and Management Accountants of Pakistan (ICMAP)
Ø Management Accountants of Sri Lanka and
Ø The Institute of Cost and Management Accountants of Bangladesh
The Institutes in such small countries have gained more opportunities in the third world over our professionals because of our name.
The names of other parallel institutes in different countries are indicated below:
• Chartered Institute of Management Accountants (CIMA), UK
• Institute of Certified Management Accountant, USA
• CMA, Canada
Moreover, a comparative study of the services rendered by Management Accountants in advanced countries like USA, UK and Canada and Cost
Accountants in India are juxtaposed in the table indicated below:
Service Offered by Management Accountants in USA, UK and Canada Services Offered by Cost Accountants in India
Formulation of strategy
Planning and controlling activities
Optimization of resource use
Strategic decision making
Valuation of Business / Assets
Cost Management etc
Strategic decision making in business operations
Resource planning and control
Valuation of Enterprises
Management Audit for different functional areas
Cost Audit in specified industries
Special Audit under various statutes
Financial planning & services
Stock Audit and Assets verification for Banks etc
ICWAI being a member of International Federation of Accountants (IFAC),Confederation of Asian and Pacific Accountants (CAPA) and South Asian
Federation of Accountants (SAFA) is fully aware of the development of the profession at International level and revises its course curriculum from
time to time to update the knowledge and skill of the professional members of the Institute and undertake research in applied fields to test the new
tools and techniques of Management Accountant. The contribution of ICWAI towards the development of Management Accounting profession is greatly
recognized by these international bodies and they recommended for the change in the name of the ICWAI so that the members of the institute are not
misrepresented in international forum.
Recently CIMA of U.K. is entering in India. But by objecting to our rightful description, ICWAI is denied opportunity to fight back to become a global player at a level playing field.
Further, a professional body is all about excelling and setting standards in the following three processes in its focus areas:
Ø Education, Training and Certification;
Ø Research and Publishing;
Ø Making authoritative pronouncements to be considered as standards or
guidelines on the subject.
ICAI has all along been concentrating mainly on compliance like audit,accounting and direct taxes from the above perspective processes and cannot
stake a claim on management accounting discipline.
With the change in the global scenario due to liberalization, the world of competition has become fierce and the service potentials of the Management Accountants have been greatly recognized for effective resource management towards achieving better and greater value addition. The Indian Cost and Management Accountants are considered as highly acclaimed professionals even in USA, Canada, Europe and other developed Countries. The change in the name will be recognition of attaining a level of International standard in the professional fields. To explore full advantage of service potentials of professionals of the ICWAI universally, it is requested that the Institute be renamed as "Indian Institute of Cost and Management Accountants" which will reflect brand name "Indian" along with Indian
Institute of Management, Indian Institute of Technology, Indian Institute of Science, Indian Space Research organization, Indian Medical Association,
etc. This will also help the Institute while negotiating mutual recognition agreements as required under WTO
COMMITTEE FOR CHANGE OF NAME OF THE INSTITUTE
Chandra Wadhwa, Vice-president
K.G. Goyal, CCM
Dr. Sanjiban Bandyopadhyaya, CCM
B.M. Sharma, CCM
M. Gopalakrishnan, CCM
A.S. Durgaprasad, CCM
A.N. Raman, CCM
Bibhabananda Majumdar, CCM -
Pravakar Mohanty, CCM
Rakesh Singh, CCM
Sanjay R. Bhargave, CCM Elect,
Ashwin G. Dalwadi, CCM Elect
G.N. Venkataraman, CCM Elect
Kunal Banerjee, CCM Elect
Suresh Chandra Mohanty, CCM Elect
Somnath Mukherjee, CCM Elect
Hari Krishan Goel, CCM Elect
Balwinder Singh, CCM Elect
FOR CHANGING NAME OF THE INSTITUTE TO "THE INDIAN INSTITUTE OF COST & MANAGEMENT ACCOUNTANTS" AT THE EARLIEST.
The Name change of ICWAI petition to Govt of India, Ministry of Corporate Affairs and Indian Parliament was written by Raj and is in the category Politics at GoPetition.