Cost audit - at a glance - a must watch by all

Hey friends - A Very good evening to all the members of CCI Family.

Today i thought to write on " Cost Audit - At a Glance ". This is gonna be a really interesting as well as knoledgable article.

I Hope that all of you will like it. So lets go for it my friends.

1. Introduction -

In this Article i will explain to you all the relevant aspects of cost audit, what are it's need, kinds , qualification , dis qualifications , powers and duties of cost auditor, etc.

Meaning of cost audit -

(a) It means verification of cost records.

(b) Examination of these records to ensure that  they adhere to cost accounting principles, plans, objectives and procedured.

Appointment -

As per section 233 B , a cost auditor shall be appointed by the BOD of the company and with the previous approval of CG. Further it has been provided that before appointement of any cost auditor is made by the board a wriitten certificate shall be obtained by the board fro that auditor that the appointment if made will be in accordance with the provisions of sub section ( 1B ) of section 224.

Qualification of Cost Auditor -

(a) Holding appointment as statutory auditor under section 224 of the act.

(b) He should not be an employee of the company.

(c) Should not hold securities of the company.

Types of cost audit -

(a) On behalf of management -

1. Establishing accuracy of cost data.

2. Determining proper overheads rates.

3. Fixation of contract price.

4. Determing unit cost of production.

5. Improving quality of cost accounting system.

(b) On behalf of customer -

For cost plus contract.

(c) On behalf of government -

For subsidies, etc. It may be conducted to determine fair price.

Exemption from cost audit -

1. Situation for Exemption -

(a) Temporary closure of company / product.

(b) Negligible ( Too small ) production activity.

2. Fees

 Thanks & Regards

Sanyam Arora