It means that cost audit is no more mandatory unless directed by the commission subject to the recommendation of the regulatory authority supervising the business of relevant sector or any entity of the sector. There is also an element of ambiguity in the company law as the word "regulatory authority" is not defined as to who is the regulatory authority of the particular economic sector and when, why and on what terms of reference (ToRs) will it recommend the SECP for cost audit.

After the commencement of Companies Act, 2017, the ongoing cost audit assignments of the existing companies have come to halt and terminated. The cost audit is now the first casualty of Companies Act, 2017. Avoidance of cost audit as a regular feature in the industry is against the spirit and core objectives of the Companies Act, 2017. Accounting fraternity all over Pakistan wonder as to how the cost control will be exercised in the absence of cost audit in the industry.

In view of the declining exports, adverse current account position and rising cost of doing business and more particularly the economic effects of CPEC, the importance of cost audit cannot be ignored. The cost audit should be made fully applicable to each and every industry so that invisible losses, unusual wastages and industrial losses are adequately avoided.

In view of the foregoing facts and ground realities, it is hoped that SECP may like to review the text of controversial legal provision of sub section 2 of section 250 of Companies Act, 2017 and make necessary amendments by deleting it from the company law so as to make cost audit compulsory in each and every industry without involving the so called 'regulatory authority' if any.

Copyright Business Recorder, 2017