ISLAMABAD: The Securities and Exchange Commission of Pakistan on Monday withdrew the Vegetable Ghee and Cooking Oil Companies (Cost Accounting Records) Order 1990, and also issued a circular requiring the appointment of QCR-rated auditors for the performance of cost audit.
The 1990 order required companies in ghee and cooking oil sector to 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 the local industry imports bulk of refined, bleached and deodorised cooking oil and markets it subsequent to packaging.
The manufacturing constitutes only negligible part of the producing process hence the cost records/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. Quality control for auditors: To strengthen vigilance on cost auditors reporting on the cost accounts, the SECP introduced quality control mechanism for cost auditors.
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).
The SECP has also highlighted the qualifications of the chartered accountants.
Those chartered accountant who fulfill the criteria of 1961 Chartered Accountants Ordinance or the 1966 Cost and Management Accountant within the meaning of the Cost and Management Accountants Act, with satisfactory rating under Quality Control Review Programme of the ICAP or ICMAP shall be recommended by public companies.
All public companies are directed to ensure compliance and recommend only QCR-rated auditors for cost audit for financial year ending June 30, 2016.