Cost auditing


A cost audit represents the verification of cost accounts and checking on the adherence to cost accounting plan. Cost audit ascertains the accuracy of cost accounting records to ensure that they are in conformity with cost accounting principles, plans, procedures and objectives. A cost audit comprises the following;
Basic qualification for a cost auditor is the prescribed examinations and practices by the professional nd regulatory body for cost and management accountancy of the country. In case a person is the member of other professional bodies, exemption should be allowed to him/her under the mutual recognition agreements to become a cost auditor.

Cost audit procedures

Cost audit comprises the following three steps:

I/We,........................................... having been appointed as Cost Auditor under Section........ Companies Act of......................................................... having its registered office at.................................................... , have audited the books of account prescribed under the said Act, and other relevant records in respect of the.................................... for the period/year............................. maintained by the company and report, in addition to my/our observations and suggestions in para 2.
  1. I/We have/have not obtained all the information and explanations, which to the best of my/our knowledge and belief were necessary for the purpose of this audit.
  2. In my/our opinion, proper cost records, as per.............., have/have not been maintained by the company so as to give a true and fair view of the cost of production/operation, cost of sales and margin of the product/activity groups under reference.
  3. In my/our opinion, proper returns adequate for the purpose of the Cost Audit have/have not been received from the branches not visited by me/us.
  4. In my/our opinion and to the best of my/our information, the said books and records give/do not give the information required by the Companies Act, in the manner so required.
  5. In my/our opinion, the said books and records are/are not in conformity with the Cost Accounting Standards issued by the Institute of Cost and Works Accountants of India, to the extent these are found to be relevant and applicable.
  6. In my/our opinion, company has/has not adequate system of internal audit of cost records which to my/our opinion is commensurate to its nature and size of its business.
  7. Detailed unit-wise and product/activity-wise cost statements and schedules thereto in respect of the product groups/activities under reference of the company duly audited and certified by me/us are/are not kept in the company.
  8. As required under the provisions of................, I/we have furnished Performance Appraisal Report, to the company, on the prescribed form.
  • Observations and suggestions if any, of the cost auditor, relevant to the cost audit.


Date:
Place:


Signature of cost auditor
Membership number