SECP for qual­ity con­trol mech­a­nism for au­di­tors

The Pak Banker - - NATIONAL -

Se­cu­ri­ties and Ex­change Com­mis­sion of Pak­istan (SECP) in its re­cent meet­ing has with­drawn the 1990 Veg­etable Ghee and Cook­ing Oil Com­pa­nies (Cost Ac­count­ing Records) Or­der, and is­sued a cir­cu­lar re­quir­ing ap­point­ment of QCR-rated au­di­tors for per­for­mance of cost au­dit.

The SECP has been en­trusted with a mul­ti­fac­eted role of en­sur­ing ac­count­abil­ity and trans­parency and at the same time en­hanc­ing the ease of do­ing busi­ness. It, there­fore, con­stantly eval­u­ates its reg­u­la­tory regime to achieve the afore­said del­i­cate bal­ance, said a state­ment is­sued here on Mon­day. Veg­etable Ghee and Cook­ing Oil Com­pa­nies (Cost Ac­count­ing Records) Or­der re­quired that the com­pa­nies in this sec­tor main­tain cost records. Th­ese records were fur­ther re­quired to be au­dited un­der the pro­vi­sions of the 1984 Com­pa­nies Or­di­nance. A re­view of the sec­tor re­vealed that prac­ti­cally lo­cal in­dus­try im­ports the bulk of re­fined, bleached and de­odor­ized cook­ing oil and mar­kets it sub­se­quent to pack­ag­ing. The man­u­fac­tur­ing con­sti­tutes only neg­li­gi­ble part of the pro­duc­ing process hence the cost records and au­dits did not add value to the un­der­stand­ing of the fi­nan­cials of such com­pa­nies. It was also noted that busi­nesses in ghee and cook­ing oil sec­tor mostly op­er­ate in other than com­pany form. At the same time, in or­der to strengthen vig­i­lance on cost au­di­tors re­port­ing on the cost ac­counts, the SECP has in­tro­duced qual­ity con­trol mech­a­nism for cost au­di­tors.

Thereby, the SECP now re­quires all pub­lic com­pa­nies to ap­point only cost and man­age­ment ac­coun­tants or char­tered ac­coun­tants as their cost au­di­tors, which hold sat­is­fac­tory rat­ing from the In­sti­tute of Cost and Man­age­ment Ac­coun­tants of Pak­istan (ICMAP) or the In­sti­tute of Char­tered Ac­coun­tants of Pak­istan (ICAP). Ac­cord­ingly, char­tered ac­coun­tant within the mean­ing of the 1961 Char­tered Ac­coun­tants Or­di­nance or the 1966 Cost and Man­age­ment Ac­coun­tant within the mean­ing of the Cost and Man­age­ment Ac­coun­tants Act, which hold sat­is­fac­tory rat­ing un­der Qual­ity Con­trol Re­view Pro­gram of the ICAP or ICMAP shall be rec­om­mended by pub­lic com­pa­nies for pur­pose of seek­ing the SECP's ap­proval for ap­point­ment of cost au­di­tor un­der the re­quire­ments of Com­pa­nies Or­di­nance, and the 1998 Com­pa­nies (Au­dit of Cost Ac­counts) Rules.

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