Chartered Accountants lobby looses against Cost Accountants in Karnataka HC
Hon’ble Karnataka High Court has dismissed petition filed by the Karnataka State Chartered Accountant Association (KSCAA) against inclusion of Cost Accountants in the definition of auditors for the purpose of appointment under the Karnataka Co-op. Societies Act.
KSCAA had filed a WP challenging the amendments made in section 63 of the Karnataka Co-operative Socieites Act, 1959 (KCS Act) which allowed auditing of the accounts of state cooperative societies by cost accountants. It was prayed by the KSCAA in the WP to declare such amendment as null and void and ultra-virus the Constitution.
KSCAA had alleged that due to political pressure and lobbying by the members of the Cost Accountant fraternity, the State Legislature sought to bring a further amendment in said Section 63 to enlarge the scope of auditor to include a Cost Accountant within the meaning of Cost and Works Accountants Act, 1959.
KSCAA had contended that the State had overlooked the distinction between the two professional classes and depicted the distinction as under:
|Chartered Accountant||Cost Accountant|
|Through knowledge of every aspect of accounting, auditing and taxation.||Knowledge of cost and financial management to ensure a fine balance between expenditures and available resources|
|CAs are involved in core accounting work of an organization||Cost accountants are involved in the costing part of financial transactions|
|CAs analyse risk and design efficient financial system||Cost accountants assess the feasibility of projects vis-à-vis available funds|
|Taxation and auditing are main duties of a Chartered Accountant||Cost management and designing cost controls methods are main duties of a Cost Accountant|
“On a careful consideration of the rival contentions, Hon’ble Karnataka High Court held that 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. This statutorily governed and there can be no entrenchment on such functions. It is not the case of the petitioners that auditing the accounts of a cooperative society is the exclusive domain of Chartered Accountants, if that be so, there is no ground for challenge made out.”