Cost accounting takes centre stage with CMA

In a landmark event to highlight the importance of cost accounting, the Institute of Certified Management Accountants of Sri Lanka (CMASL) and Institute of Cost Accountants of India (ICAI) hosted a joint international cost conference recently. 

Titled ‘Cost and Effect on Industry and Services to Drive Business Performance’, the conference brought together delegates from India, Pakistan, Bangladesh, the Maldives and Sri Lanka, fostering cross-regional dialogue and knowledge exchange on a critical aspect of cost accounting and applicability of cost mechanisms through legal provisions. 

The theme resonated deeply with the attendees, reflecting the growing recognition of cost accounting’s role in boosting organisational efficiency and competitiveness. Notably, the ICAI council members shared their experiences with implementing cost accounting standards and highlighted their multifaceted benefits:

*Price control of essential goods: Maintenance of cost records and cost accounting, which require accounting records to include cost records in the Companies Act and by the regulators in the monitoring of cost of electricity, healthcare, education and other essential commodities such as cement, steel, milk foods, etc. and this would enable accurate pricing decisions, ensuring affordable pricing and access to vital commodities and elimination of super profits by having transparent cost information that fosters fair market competition and prevents excessive profiteering.

*Resource allocation: Efficient resource utilisation optimises production processes and minimises waste.
*BEffective cost tracking identifies and eliminates resource mismanagement, reducing unnecessary expenditure.
*Efficiency increase: Cost accounting provides crucial insights to streamline operations and enhance productivity.
Furthermore, the ICAI emphasised the importance of maintaining verifiable and standardised cost records and cost sheets. Consistent use of standard format cost statements across industries guarantees information comparability and facilitates insightful decision-making. This will also enable efficiency and productivity, making our products competitive in the export market. 

However, the Sri Lankan speakers revealed the distinct challenges within the local landscape:
*Low recognition and legal backing of cost accounting: Awareness and understanding of cost accounting principles remain limited.

*Unavailability of verifiable documented cost records: Inconsistent record-keeping practices hinder comprehensive cost analysis.
*Non-preparation of cost statements in a standard manner: Difficulty in comparing data and drawing meaningful conclusions, due to varied presentation formats.
In response, the CMASL agreed to collaborate with the ICAI to address these shortcomings. Their joint initiative aims to:

*Establish standard cost accounting standards in Sri Lanka.
*Promote the adoption of these standards across both public and private sectors in Sri Lanka.
*Introduce and promote standard cost reporting sheets and statements and guidelines, ensuring transparency and accuracy in financial reporting and having information to make informed decisions in price control.
*Enhance awareness and understanding of cost accounting principles among stakeholders.

This collaborative effort promises to revolutionise cost accounting practices in Sri Lanka. By ensuring the availability of reliable and standardised cost information, the initiative empowers the government and the public with the tools to make informed decisions and drive efficient resource management. Ultimately, the joint conference and subsequent collaboration mark a significant step towards fostering sustainable economic growth, affordable pricing and bolstering business performance and exports across the region.