Cost Audit Final
Cost Audit Final
: Verify the cost accounts have been properly maintained Check the adherence to the cost accounting plan
Detection of errors and fraud Helps in fixation of price Ensuring optimum utilization of resources Proper method for Inventory Valuation Channelizing the resources on most productive & profitable areas
Cost Auditor- appoint by BOD Cost Auditor- submit the audit report, in triplicate to the Central Govt. & Co. Copy of Cost Audit report has to be attached to Income Tax Return Statutory Cost Audit can be conducted only by a cost accountant holding a certificate- ICWA
financial audit means the verification of the financial statements of a legal entity. The audit gives a reasonable assurance that the financial statements exhibits a true and fair view of state of affairs of the business.
Financial Audit Audit of financial account has been compulsory under companies Act 1956.
Cost Audit Cost Audit is not compulsory in all companies expect in certain specified companies which is notified by central government from time to time under sec 233 B. Cost Auditor has to check the propriety of each item of expenditure and certify whether they have been incurred prudently or not.
The Financial Auditor is required to report whether the financial statement exhibits true and fair view of state of affairs of the business
Financial Auditor sees whether the expenses Cost Auditor ensure that the expenses incurred are supported by proper vouchers incurred have been aimed at achieving better results.
Financial Auditor submit his report to the shareholders. Financial Audit is mainly to check the arithmetical accuracy of different books of accounts. The work of Financial Auditor is in the office Cost Auditor reports to the Board of Directors Cost Auditor sees also whether suitable steps have been taken to reduce the cost of production The work of Cost Auditor is in the factory
ADVANTAGES TO MANAGEMENT Helps to control on different elements of cost Helps in decision making Helps in reducing price Get advice on day to day activities Helps in budgetary control
Status will go high Improve costing efficiency Cost accounts can be reconciled with financial accounts
To know the efficiency or inefficiency of management To know about the utilization of resources To know about the productivity of material, labour and machine Fair return on investment
Ensures about the correctness of the cost data in case of cost plus contracts Correct cost data helps government in fixing fair price of the products Helps contractors in case of escalation clause Cost audit pinpoints the areas where economy and efficiency can be achieved Helps consumers to get goods at fair price
Expensive luxury. Secrecy in cost. Duplication of work. Shortage of cost accountants. Some accounts audited once by financial auditors.
Technique used by a cost accountant in the performance of his job. Some of the techniques are; vouching Checking and ticking Test checking Working papers Audit notes Questionnaires
Meaning: The examination review of various policies and action of the management on the basis of certain specified objectives. Definition: Management audit is independently examination of organisation structure ,operation function, analyzing goals, plan , policies, activities, weaknesses and evaluation of earning capacity of the management
or irregularities of
To ensure that the management is going to achieve the objectives. To help the management to do efficient administration of the operations.
Management audit provides information about strong and weak point of the management after reviewing policies and programs. So, it helps to the smooth operation of an organization. Management audit provides suggestions to the management which helps to maintain effective management. Management audit helps the management providing suggestions to attain goal of an organization.
Management auditor cannot understand the practical problems. So, the suggestions provided by them is theoretical but not practical.
Scope of management audit is vague. So, it does not help to achieve specific goal.
Generally management give more emphasis on maintaining books of accounts rather than concentrating on other factors. So, it consumes time of farsighted management.
Management Audit
Cost Audit
It is a comprehensive critical review of all It is a verification of correctness of cost aspects of management processes accounts and of the adherence to cost accounting plans. The Management Audit is not a statutory requirement. It is not a regular feature. Management may decide to go for management audit whenever need arise The Management Auditor critically examines the policies and objectives of management and report on their sustainability The management auditor need not possess any specific qualification. He must have knowledge and experience in the field of accountancy, management and financial administration. In certain industries Cost Audit is compulsory and a statutory requirement as per government notification It is a regular feature and is conducted every year. The Cost Auditor checks cost accounts only. The cost auditor must possess certain requisite qualification as per the provision of the companies act, 1956.