07 August 2011
Cost Audit is the process of ascertaining whether the production, marketing and sales processes as well as other aspects of a business are managed in the most cost effective way. This is essentially an Internal Audit and is done as a tool for optimising management efficiency. The most important benefit is the location of unseen leaks in revenues or unproductive or under- productive employment of resources
It is mandatory if the Business is under scrutiny by a financial institution or regulator on the basis of complaints of mismanagement. Always it is desirable to have a Cost audit done periodically, to prevent the situation getting out of control, and to help the management to take prompt action where necessary.
The format have been mentioned under the Cost (Accounting Record) rules.
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