Bengaluru

HC: cost accountants can audit accounts of cooperative societies

The Karnataka State Chartered Accountants’ Association has lost a legal battle against the State’s two-year-old law, which permits using the services of cost accountants to audit accounts of cooperative societies.

The earlier provision of the Karnataka Cooperative Societies (KCS) Act, 1959, had made it mandatory that auditing of cooperative societies should be assigned only to the departmental auditors or to chartered accountants under the Chartered Accountants Act, 1949.

However, in 2014, the State amended Section 63 of the Karnataka Cooperative Societies Act and allowed assigning the task of auditing to cost accountants, who come under the purview of the Cost and Works Accountant Act, 1959.

This amendment led the association of chartered accountants to file a petition before the Karnataka High Court alleging that it resulted in “encroaching on the profession of chartered accountants” and the law was amended owing to “pressure of lobbying and political pressure, brought on by members of the cost accountants’ fraternity.

Justice Anand Byrareddy, while dismissing the petition, said “…it is not evident that by virtue of impugned amendment, a cost accountant has been enabled to carry out functions which can only be performed by a chartered accountant…”

The court also noted that auditing the accounts of cooperative societies is not the exclusive domain of chartered accounts.

The State government, while contending that costing work plays an important role in functioning of the cooperative societies, said there was shortage of professionals for auditing in the State and cost accountants were entrusted with the task as they too have adequate knowledge of accounting principles.

The Karnataka State Cost Accountants’ Association pointed out to the court that the curriculum of cost accountants is similar to chartered accountants, besides the service rendered by them, and claimed that around 46 statutes of Central and various State governments empower auditing by cost accountants.


Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Sep 27, 2021 2:05:54 AM | https://www.thehindu.com/news/cities/bangalore/hc-cost-accountants-can-audit-accounts-of-cooperative-societies/article8427865.ece

Next Story