Cost audit of government expenditure on the anvil

Staff Reporter

ICWAI's two-day State-level seminar in the city inaugurated

A total of 28 cost auditing regulations are in pipeline

Costing is not given due importance, says VPT chief

VISAKHAPATNAM: All government expenditure will be subject to cost auditing and already 10 regulations have been issued of which six are mandatory from April 2010, according to Director of IDBI Bank and LIC Housing Finance K. Narasimha Murthy. A total of 28 cost auditing regulations are in the pipeline.

“In a couple of years, we will be following the European model and all government expenditure will be cost audited,” Mr. Murthy, a member of the expert committee on cost auditing appointed in 2008-09, said here on Friday. Every company would also be subjected to the process.

He was delivering the key-note address at a two-day State-level seminar on ‘Effective Corporate Environment-Best Practices for Costing and Managing an Effective Environment Strategy,' organised by the Visakhapatnam Chapter of the Institute of Cost and Works Accountants of India, Southern India Regional Council.

New buzzword

In corporate governance, enterprise governance was the new buzzword of which performance governance was an important part, he said dwelling on the challenges faced post-WTO. Changing strategies according to changing situations and continuous cost reduction enhancing margins would add to stakeholders' value, he said.

Greatest challenge

“The greatest challenge for performance governance in the global scenario comes from frequent change in business cycles, artificial barriers, monitoring frequently changing demand supply situation and shifting consumer demand,” Mr. Murthy said.

After deregulation, the Indian economy was galloping and growth was exponential but skewed with jobless growth, bleak agricultural scenario and wide gap in GDP sharing, he regretted.

Visakhaptnam Port Trust Chairman Ajeya Kallam said the public sector had a long way to go and costing was not given due importance.

Many departments on which money was not worth spending keep on continuing. Citing the example of political decision not taking costing repercussions into consideration, he said merging DLB with the port trust proved costly.

Costing needed to be looked at a macro-level and also costing of each and every activity of the organisation should be taken up, he felt.

Overall equity and fairness also should be maintained vis-à-vis CEOs' pay, he said citing the legendary contribution of Norman Borlaug to the green revolution and what he took home by way of pay. Satyananda Rao of ICWA Visakhapatnam chapter welcomed. Vice-Chairman G.S.R. Krishna Murthy spoke of the objectives of the seminar and the activities of the chapter for investor awareness. Secretary M. Prakash spoke.