In a landmark event to highlight the importance of “Cost Accounting”, the Institute of Certified Management Accountants of Sri Lanka (CMASL) and the Institute of Cost Accountants of India (ICAI) hosted a joint International Cost Conference on 20 January, 2024, 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 attendees, reflecting the growing recognition of cost accounting›s role in boosting organisational efficiency and competitiveness. Notably, ICAI council members shared their experiences in implementing cost accounting standards and highlighted their multifaceted benefits:
- Price control of essential goods: Maintenance of cost records and cost accounting that require accounting records to include cost records as per the Companies Act and regulators, in monitoring the cost of electricity, healthcare, education and other essential commodities such as cement, steel, milk foods, etc. This would enable accurate pricing decisions, ensuring affordable pricing and access to vital commodities and the elimination of super profits through transparent cost information that fosters fair market competition and prevent excessive profiteering.
- Resource allocation: Efficient resource utilisation optimises production processes and minimises waste.
- Waste minimisation: Effective 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 would enable efficiency and productivity, making the products competitive in the export market.
However, Sri Lankan speakers revealed 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, CMASL agreed to collaborate with 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, 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.