Empanelment of Cost Accountants at BSNL

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Empanelment of Cost Accountants at BSNL

Postby cmagururajan on Mon Jan 16, 2012 6:06 pm

Dear Members,

ICWAI has received a communication from Bharat Sanchar Nigam Limited (BSNL), a fully Central Govt. owned company which is providing telecom services throughout the Nation, seeking a panel of Cost Accountant Firms for the purpose of selection and appointment of Cost Auditor from amongst such panel, for their 24 circle office and 2 District offices namely Chennai phones and Kolkata phones.

Proposed total fees including out of pocket expenses for Cost auditors for 27 circles is Rs 20,03,000/=

Cost Auditors for 24 circles and 2 Districts Totally 26 Cost Auditors for the circles and districts and one Central Cost Auditor.

http://members.icwai.org/members/docs/Annexure-C.pdf

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Re: Empanelment of Cost Accountants at BSNL

Postby chinnasreddy on Mon Jan 16, 2012 10:46 pm

How many Cost Accountant firms are there in India which can fullfill the eligibility criteria prescribed by BSNL ? New entrants in the profession may not get oppurtunities in C Audit areas.
BSNL fees is not commensurate with its size and turnover .

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Re: Empanelment of Cost Accountants at BSNL

Postby cmagururajan on Tue Jan 17, 2012 9:32 am

Exactly. The entire saga makes me feel BSNL has not understood the purpose of Cost Audit. The novel Cost Audit has been made to look like as just yet another audit for compliance sake. If Cost Audit were to be done with an attitude like audit for compliance sake...then cost audit would be better if it is without it.
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Re: Empanelment of Cost Accountants at BSNL

Postby Dr_D_Selvaraj on Tue Jan 17, 2012 6:43 pm


The process of cost audit involves the following.

(i) Existence of proper costing accounting system in the Company commensurate to the nature of business.

(ii) Maintenance of regular Cost records, books etc

(iii)Previous years Cost Audit report

(iv) Conducting cost Audit by the Cost Accountant.

2. In the case of BSNL item (i) to (iii) is not in vogue. It is impossible for the Cost accountant to accomplish the task even if he gets the cost Audit from BSNL.

3. The BSNL has made mockery of the compliance of Cost Audit requirements. The fee indicated by the BSNL is less than 10 percent of the fee prescribed by the Institute for such audit. It is less than the fee paid to the internal auditors. The members are requested to think twice before applying for cost Audit in BSNL. Above all, the Cost ascertainment in Telecom sector is complex.

4. The information given in para 2 ibid is applicable for most of the companies for which the cost Audit is prescribed. In the first year of compliance, it is going to be a difficult task for most of the Cost Accountants.

Dr. D.Selvaraj

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Last edited by Dr_D_Selvaraj on Wed Jan 18, 2012 9:16 am, edited 1 time in total.
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Re: Empanelment of Cost Accountants at BSNL

Postby chinnasreddy on Tue Jan 17, 2012 7:31 pm

ICWAI HAS TO REPRESENT / PERSUE THIS TYPE OF MATTERS IN THE OVER ALL DEVELOPMENT OUR PROFESSION
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Re: Empanelment of Cost Accountants at BSNL

Postby cmagururajan on Tue Jan 17, 2012 11:22 pm

Some months ago ICAI came out with recommendations on the fee structure chargeable likely, to be adopted by PCA's . Can anyone post the link ...
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Re: Empanelment of Cost Accountants at BSNL

Postby vinayak_sahni on Wed Jan 18, 2012 12:52 am

I agree with Dr. David Selvaraj , The prescribed fees is not at all in justification to the complexity of Audit process involved in telecom sector . BSNL provides Multiple services & has 26 Circles.First time compliance is also an issue. I firmly feel that the prescribed fees should be revised.
Cost Audit should be taken as Value Addition task & not just as Compliance Procedure.
Last edited by vinayak_sahni on Wed Jan 18, 2012 7:00 pm, edited 2 times in total.
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Re: Empanelment of Cost Accountants at BSNL

Postby Dr_D_Selvaraj on Wed Jan 18, 2012 6:10 pm


No, I don't want to discourage younger Members. They can very well apply with the ladder as suggested below. The revenue is more than Rs one thousand crores in each circle and also in two Telecom Districts Chennai and Calcutta and hence the fee payable as per the Institutes guidelines is more than Rs 5 Lakhs per circle.

(i) On a fee prescribed by the Institute of cost and Works accountants of India for such cost Audit plus the Income tax and Service tax on such payments and all expenses connected with Travel.(copy of CCM decision to be attached - it is there some where in this portal which the members may find it) If necessary by adding "Negotiable"

(ii) The BSNL Management is also requested to ensure keeping of all the Cost Accounting records and the Cost statements before commencement of the cost Audit when the work is awarded.


Dr.D.S
Last edited by Dr_D_Selvaraj on Thu Jan 19, 2012 2:34 pm, edited 1 time in total.
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Re: Empanelment of Cost Accountants at BSNL

Postby soumen_7 on Wed Jan 18, 2012 10:40 pm

Above all, the Cost ascertainment in Telecom sector is complex.


Dr Selvaraj. I am fully agree with you. being in Telecom Industry Exp of 8 yrs, Telecom sector costing is more complex. because, in telecom industry, Goods In and Goods out concept is not exist.
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Re: Empanelment of Cost Accountants at BSNL

Postby santoshputhran on Thu Jan 19, 2012 12:31 pm

ICWAI has received a communication from Bharat Sanchar Nigam Limited (BSNL), a fully Central Govt. owned company which is providing telecom services throughout the Nation, seeking a panel of Cost Accountant Firms for the purpose of selection and appointment of Cost Auditor from amongst such panel, for their 24 circle office and 2 District offices namely Chennai phones and Kolkata phones.

Proposed total fees including out of pocket expenses for Cost auditors for 27 circles is Rs 20,03,000/=


No, I don't want to discourage younger Members. They can very well apply with the ladder as suggested below. The revenue is more than Rs one thousand crores in each circle and also in two Telecom Districts Chennai and Calcutta and hence the fee payable as per the Institutes guidelines is more than Rs 5 Lakhs.


Pricing is a matter of strategy for the practising firm. In this case, BSNL has proposed a fees for a certain amount. However firm of Cost Accountant estimates, the fees would be more due to complexities of the assignment, it should put that in its proposal. In the proposal, the CMA firm has to demonstrate, the level of experience of its partners / employees, audit methodology, experience in telecom industry, etc to give an insight to BSNL why they should selected for the audit.

In case BSNL decides only on fees they advertised, it is likely the proposal of the CMA firm will be rejected. However BSNL will not say to the public or ICWAI, they did not get enough response from practising cost accountants.The message to BSNL would be you have to improve the fees that is commensurate with the size and complexities of audit.

------

ICAI guidelines on minimum fees. I did not find for the guideline issued by ICWAI.

Recommending minimum fees is by organisation for its member, means they function like a cartel. I feel, they can issue guideline to its members firms on how to compute the fees but the not fees itself. If any consumer organisation or a company files a case in the court on the accounting body on such guidelines that recommends its members to charge minimum fees, it is more likely the court will decide against the accounting body... as it can term it as an unfair trade practise.

See Competition Commission
Last edited by santoshputhran on Thu Jan 19, 2012 12:39 pm, edited 2 times in total.
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