Ministry of Finance

Department of Expenditure

Office of Chief Adviser Cost

…….

 

 

Extracts of Annual Report of Ministry of Finance for the year 2008-09 in respect of the Office of Chief Adviser Cost

 

1.  The Office of the Chief Adviser Cost (CAC) is responsible for advising the Ministries and Government Undertakings on cost accounts matters and to undertake cost investigation work on their behalf.  Office of Chief Adviser Cost is one of the divisions functioning in the Department of Expenditure. It is a professional body staffed by Cost/Chartered Accountants.


2.  The Chief Adviser Cost Office, is dealing with matters relating to costing and pricing, industry level studies for determining fair prices, studies on user charges, central excise abatement matters, cost-benefit analysis of projects, studies on cost reduction, cost efficiency, appraisal of capital intensive projects, profitability analysis and application of modern management tools evolving cost and commercial financial accounting for Ministries/Department of Government of India.

 

3.  It was set up as an independent agency of the Central Government to verify the cost of production and to determine the fair selling price for Government Departments including Defence purchases in respect of the cases referred to. The role of the office was further enlarged and extended to fixing prices for a number of products covered under the Essential Commodities Act, such as, Petroleum, Steel, Coal, Cement, etc. under the Administered Price Mechanism (APM). Since cost/pricing work in the Ministries increased significantly, various other Ministries/Departments started to have their in house expertise by seeking posting of services of officers for work needing expertise in cost/commercial accounts matters.  In the Post liberalization era, the office is receiving and conducting studies in synchronization with the liberalization policy of the Government in addition to the traditional areas of cost-price studies.

 

4.  The Chief Adviser Cost’s Office is also cadre controlling office for the Indian Cost Accounts Service (ICoAS) and looks after training requirements of the officers for continuous up-gradation of their knowledge and skills, in addition to rendering professional guidance to the ICoAS officers working in different participating organizations.

 

5.   The major areas of professional functions of the office of the Chief Adviser Cost are as under:

 

(i)      Assisting all Central Government Ministries / Departments / Organizations in solving complex Price / Cost related issues, in fixing fair prices for various services/products and rendering advice to various Ministries/Departments in cost matters.

 

(ii)    Examination / Verification of claims between Government Departments / Public Sector undertakings and suppliers arising out of purchase contracts.

 

(iii)   Determining prices of products and services supplied to Government, in order to enable Government Departments to negotiate the prices with the supplying organizations.

 

(iv)    Unit specific as well as industry level studies for determining cost/fair prices and making recommendations for fair prices / rates for products and user charges for services, revision of these charges and also to determine reasonableness of prices charged, duty structure, etc.

 

(v)    Valuation of assets and liabilities of business taken over and shares of public sector undertakings.

 

(vi)    Functioning as Chairman/Members of Committee constituted by Government / different Departments related to Cost/financial and Pricing matters.

 

(vii)   Cost and performance audit of industrial undertaking.

 

(viii)  Concurrent Internal audit of Escalations claims of urea manufacturing units determined   by                Fertiliser Industry Coordination Committee.

 

(ix)    Subsidy detrimental and verification of claims.

 

(x)     Cost Accounting System for departmental undertakings/Autonomous bodies.

 

(xi)    Time and Cost Overruns of major projects.  Efficiency and Competitiveness studies.

 

(xii)   Arbitrator in resolving pricing disputes.

 

(xiii)  Advise on matters relating to determination of Abatement Rate for purposes of Central Excise.

 

6.    During the period January 2008 to March 2009, 78 studies/reports were completed by the Office of Chief Adviser Cost.  The studies completed during the year varied widely in nature and may be broadly categorized under the following heads:

 

(i)  Cost and Management Advise as Members of Committees.

a)  Study of Under Recovery of Oil Marketing Companies on Petroleum Products for the year 2007-08 and 2008-09.

b)  Issues relating to supply and pricing of Natural Gas – approval of subsidy rate for new LPG       Bottling Plant commissioned after 31st March, 2002.

(ii)  System Study

Review of costing system and fixation of Common Hourly Rate and Overhead Percentage in respect of Government of India Presses at Nashik, Gangtok, Koratty, Shimla , Santragachi (Howrah),  Mayapuri and Rashtrapati Bhawan, New Delhi.

 

(iii)  Fair price of goods purchased/services purchased on Single Tender basis or from limited sources

a) Fixation of final/fair prices of Handloom Cotton Bed Durries supplied by Association of Corporation and Apex Societies of Handlooms (ACASH) during the year 2004-05 under Single Tender System.

b)   Analysis of cost of Fast Attack Craft (FAC) - CB 90H.

 

(iv) Fair selling price of products/service where Government is the                          Producer/Service provider as well as the user

 

a)  Cost of production and fair selling price for items of postal stationery produced and supplied to the Department of Post by Indian Security Press, Nasik for the years 2002-03 and 2003-04 and by Security Printing Press, Hyderabad for the years 2004-05 and 2005-06.

 

b)  Fair prices of Tear Smoke Munitions produced by Tear Smoke Unit (TSU) of Border Security Force, Tekanpur, Gwalior for the year 2008-09.

 

(v) Fixation of service charges for the services rendered by a Govt.                         Department/Agency on behalf of the other

 

a)   Verification of claims in respect of Market Intervention Scheme (MIS) for potato in the State of    West Bengal during 2003-04, Passion Fruit in the State of Mizoram during 2007, Ginger in the    State of Mizoram during 2007, Bird’s eye chilli in the State of Mizoram during 2007-08.

 

b)  Verification of claim in respect of Price Support Scheme (PSS) for Copra, Sunflower Seed,     Safflower Seed for kharif 2003, Gram for Rabi 2004, Toria for Rabi 2005, Masoor for Rabi 2005, Seasame Seed for Kharif 2005 and 2006, Soyabean for Kharif 2006, cotton for Rabi 2005, Urad for Kharif 2004, Groundnut for Kharif 2004 seasons.

 

c)  Additional claim of NAFED for PSS Operation for Mustard Seed Rabi 2001 on account of Sales Tax liability.

 

     (vi)  Determination of subsidy

 

a)  Fixation of subsidy claim of Northern Railway payable by the Prime Minister’s Office for catering during 2005-06 and 2006-07.

 

b)  Subsidy payable to Northern Railway Catering Unit functioning in Parliament Housing Complex   for the year 2006-07 and 2007-08.

 

(vi) Balance Sheet on accrual accounting principles in case of Departmental manufacturing units

 

Vetting of Balance Sheet and Income & Expenditure  Account of Tear Smoke Unit, BSF, Tekanpur for the year 2007-08.

 

(viii) Concurrent Audit of escalation claims paid by FICC

 

20 Reports in respect of Concurrent Audit of Equated Freight Rate/ Escalation claim of various Fertilizer companies were issued during the year 2008.

 

     (ix)     Miscellaneous studies

a)   Ascertainment of Fair Cost/Price of Multi Purpose National Identity Card (MNIC)

 

b)  Cost of production of Boggies used for manufacturing of Railway Wagons by various units for    supply to Indian Railways.

 

c)   Examination of costing of SG GSCL Coaches by BEML to Railway Board.

 

d)  Review of User Charges/fees charged by Indira Gandhi National Open University (IGNOU), New Delhi.

 

e)   DDT(T) & DDT(F) & Mal (T) rate fixation for 2006-07 and provisional price 2007-08.

 

f)    Review of non tax revenue – fee for Patent, Design & Trade Mark Registry

 

g)   Revision of Storage Charges payable by FCI to CWC for the year 2004-05

 

h)  Vetting of prices of Ayurvedic/Unani Medicines supplied by M/s. IMPCL to CGHS Dispensaries for the pricing period 2007-08 and 2008-09.

 

i)  Determining of Laboratory testing charges for various tests carried out at Central Drugs Laboratory, CRI, Kasauli.

 

j)    Overhead Charges for the Hydrogen Factory, Agra India Meteorological Department

 

k)   Fixation of film processing rates for films Division for the year 2008-09

 

l)    Revision in the advertisement rates of Directorate of Advertisement & Visual Publicity (DAVP)

 

 

7.   Major Committees Represented

 

Officers of Chief Adviser Cost Office because of their expertise in commercial accounting have also served as Chairman/Members on the following major multi-disciplinary Inter-Ministerial/Expert Committees:

 

(i)       

Empanelment Advisory Committee (EAC) to carry out a Comprehensive Empanelment of private channels through fixation of rates of empanelled TV/Radio Channels.

(ii)     

Committee to determine the amount to be paid to DCI – Implementation of Sethusamudram Ship Channel Project (SSCP) – award of Dredging Contract.

(iii)    

National Pharmaceuticals Pricing Authority, Department of Chemicals & Petrochemicals

(iv)   

Board of Governors and the society of the National Institute of Financial Management (NIFM), Faridabad.

(v)     

Advisory Committee on Abatement for Excise Duty and Service Tax – Department of Revenue

(vi)   

Governing Body of Tear Smoke Unit, BSF, Tekanpur.

(vii)  

Standing Committees set up by various Ministries/Departments for fixation of responsibility for time and cost overrun.

(viii)                        

Fertilizer Industry Coordination Committee, Department of Fertilizers.

(ix)   

Committee to consider the procurement of agricultural commodities under the Market Intervention Scheme.

(x)     

Committee for the study of pricing/costing of services and products of Survey of India.

(xi)   

Committee to evaluate the proposal of C-DAC for comprehensive computerization of the operations in the Patent Office, Controller General of Patents, Designs & Trademarks, Department of Industrial Policy and Promotion.

(xii)  

Advisory Committee constituted for examination of draft Cost Accounting Rules framed by the Department of Company Affairs in respect of various products.

(xiii)                        

Standing Committee of State Secretaries of Stamps and Registration.

(xiv)                        

Committee for uniform costing and preparation of proforma accounts for various mints and presses.

(xv) 

Committee to examine issues relating to under recoveries of the PSU Oil Marketing Companies.

(xvi)                        

Committee to have in-depth study of various policies and practices outlined in the draft accounting manual for Government of India Presses.

(xvii)                      

Formation of Expert Committee to examine the issues relating to Stock Losses in the downstream marketing operations up to the dispatch point.

(xviii)                     

Committee on Internal Audit – to initiate the process towards framing uniformly Applicable Internal Audit Standards in Government of India. Committee on Internal Audit.

(xix)                        

Expert Accounting Committee to review the present Accounting System of Military Farms.

(xx) 

Committee under chairmanship of Secretary (Co-ordination and Public Grievances) to recommend the measures to make the office of Director General of Hydrocarbons (DGH) more Independent and transparent in its working.

(xxi)                        

Committee under Chairmanship of AS&FA, Ministry of Information & Broadcasting on Common Wealth Youth Games 2008, Pune and
Common Wealth Games 2010, Delhi.

(xxii)                      

Rate Structure Committee under the chairmanship of AS&FA, Ministry of Information & Broadcasting to review the DAVP advertisement rates.

(xxiii)                     

Tripartite Committee to study all outstanding issues and working of Jute Industry constituted by Ministry of Labour and Employment.