First Schedule explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Items (7) to (11) of Part I of the First Schedule complete the list of misconduct for cost accountants in practice: advertising and designations, taking over from another cost accountant, fees based on profits or results, other business and signing by non-members. The Act was called the Cost and Works Accountants Act, 1959 until 10 May 2022.
A cost accountant in practice commits First Schedule misconduct if he advertises or uses a designation other than "cost accountant" (subject to exceptions and a write-up proviso), accepts a predecessor's position without first writing to him, charges fees based on a percentage of profits or contingent on results (except as regulations permit), engages in other business without the Council's permission, or lets a non-member or a non-partner sign cost or pricing statements on his behalf. The 2022 change to the Schedule's heading is not in force.
How this article reads the Act
This article follows the Act as printed by the Institute (as amended in 2011), read with the 2022 Amendment Act to the extent brought into force by S.O. 2184(E) dated 10 May 2022. The First Schedule printed by the Institute is the version substituted in 2006; the wording that Act replaced is not law and is not used here. The change of the Institute's name in item (7) came from the 2011 Amendment Act. Later amendments and notifications should be checked.
The commencement trap. The heading of the First Schedule in force reads "See sections 21(3), 21A(3) and 22"; the 2022 substitution (section 72 of Act 12 of 2022) is enacted but not in force as per S.O. 2184(E). See our article on items (1) to (6). A later notification should be checked.
Part I opens: "A cost accountant in practice shall be deemed to be guilty of professional misconduct, if he-".
Item (7): advertising and designations
He advertises his professional attainments or services, or uses any designation or expressions other than "cost accountant" on professional documents, visiting cards, letter heads or sign boards, unless it be:
- a degree of a University established by law in India or recognised by the Central Government; or
- a title indicating membership of the Institute of Cost Accountants of India or of any other institution that has been recognised by the Central Government or may be recognised by the Council.
Proviso: a member in practice may advertise through a write-up, setting out the services provided by him or his firm and particulars of his firm, subject to such guidelines as may be issued by the Council.
The proviso is the only advertising route the item gives. The guidelines are the Council's and are not in the sources used here, so a member should check them before publishing. Item (7) fits with section 7, which tells practising members to use the designation cost accountant; see our article on sections 6 to 8.
Item (8): taking over from another cost accountant
He accepts a position as cost accountant previously held by another cost accountant in practice without first communicating with him in writing.
The test is simple: before accepting, write to the previous holder of the position. The item does not say what the letter must contain, whether the predecessor must reply, or what happens if he does not. A member who is unsure should keep a copy of the letter and proof of delivery. In the chartered accountants' Act, the equivalent communication with the outgoing auditor is covered in our post on clause (8) of the First Schedule to the Chartered Accountants Act; the numbering there is that Act's own.
Item (9): contingent and percentage fees
He charges or offers to charge, accepts or offers to accept, in respect of any professional employment, fees which are based on a percentage of profits or which are contingent upon the findings or results of such employment, except as permitted under any regulation made under the Act.
This is a ban with an exception left to the regulations. The Act does not list the permitted cases, so any fee linked to profits or to the findings or results of the work must be tested against the regulations before it is agreed. The chartered accountants' counterpart is explained in our post on clause (10) of the First Schedule to the Chartered Accountants Act.
Item (10): other business or occupation
He engages in any business or occupation other than the profession of cost accountant unless permitted by the Council so to engage.
Proviso: nothing in the item disentitles a cost accountant from being a director of a company (not being a managing director or a whole-time director) unless he or any of his partners is interested in such company as accountant.
So a member in practice may sit on a company's board as an ordinary director, but not as managing or whole-time director, and not where he or a partner is interested in the company as accountant. Anything else needs the Council's permission. See also our post on clause (11) of the First Schedule to the Chartered Accountants Act, which deals with the sister Act's own wording.
Item (11): signing by non-members
He allows a person not being a member of the Institute in practice, or a member not being his partner, to sign on his behalf or on behalf of his firm, any cost or pricing statements or any other statements relating thereto.
This is the professional-conduct side of section 27, which makes it an offence for a non-member to sign documents for a practising cost accountant or firm. Item (11) also names a member who is not the practitioner's partner. See our article on sections 26 and 27.
Summary table
| Item | The member must not | Key exception or qualifier |
|---|---|---|
| (7) | Advertise or use designations other than cost accountant | University degree or recognised title; write-up per Council guidelines |
| (8) | Accept a predecessor's position without writing to him first | None stated |
| (9) | Charge fees based on a percentage of profits or contingent on results | As permitted under regulations |
| (10) | Engage in other business or occupation | Council's permission; non-executive directorship |
| (11) | Let a non-member, or a member who is not his partner, sign statements | None stated |
What follows a finding
These items are heard by the Board of Discipline on the in-force text; see our article on section 21A for the penalties. An appeal lies to the Appellate Authority.
A short example
Deepak Sethi, a cost accountant in practice, is appointed to carry out the cost audit for a manufacturer after another cost accountant. He starts the work without writing to the previous cost accountant (item (8)). He also proposes to charge a fee that rises with the company's profit after the audit (item (9)), and asks his employee, who is not a member, to sign the cost statements (item (11)). Each is First Schedule misconduct. For the cost audit rules under the Companies Act, 2013, see our posts on section 148 and cost auditor appointment under section 148.
A member who wants to check an engagement letter, fee clause or signing arrangement against these items can use compliance advisory support.
The same rule for chartered accountants
See First Schedule items 9 and 12 of the Chartered Accountants Act, 1949. The numbering differs between the two Acts.
Need help with engagement and fee terms?
If you are drafting engagement letters, fee proposals or signing authority for a practice, our compliance advisory team can help you align them with items (7) to (11) and the Council's guidelines.
Key takeaways
- Advertising is limited to permitted titles and a Council-guideline write-up.
- Write to the previous cost accountant before accepting his position.
- Percentage and contingent fees are misconduct unless regulations permit them.
- Other business needs the Council's permission, with a non-executive directorship allowed.
- A non-member, or a member who is not the practitioner's partner, may not sign cost or pricing statements on his behalf.
Read next
- First Schedule, Part I, items (1) to (6)
- First Schedule, Parts II to IV
- Sections 26 and 27: companies and signing of documents
Disclaimer: Based on the Cost and Works Accountants Act, 1959 (now the Cost Accountants Act, 1959) as printed by the Institute of Cost Accountants of India (as amended in 2011), read with the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022 to the extent brought into force by S.O. 2184(E) dated 10 May 2022, as consulted on 3 October 2026. Regulations, rules, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.