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Cost

The document presents a detailed overview of Cost Audit, including its definition, objectives, and the qualifications and disqualifications for cost auditors. It highlights the importance of cost audit in ensuring adherence to cost accounting plans, improving efficiency, and providing valuable information for decision-making. Additionally, it outlines the advantages and scope of cost audit, emphasizing its role in promoting cost consciousness and benefiting consumers.

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preshitavarade
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9 views12 pages

Cost

The document presents a detailed overview of Cost Audit, including its definition, objectives, and the qualifications and disqualifications for cost auditors. It highlights the importance of cost audit in ensuring adherence to cost accounting plans, improving efficiency, and providing valuable information for decision-making. Additionally, it outlines the advantages and scope of cost audit, emphasizing its role in promoting cost consciousness and benefiting consumers.

Uploaded by

preshitavarade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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MVPs KRT Arts, BH Commerce and AM Science

(KTHM) College, Nashik


1. Name of the student: Preshita Narendra Varade

2. Class : T.Y.B.Com Division: D Roll No: 488

3. Subject : Cost and Works Accounting-III

4. Subject teacher : Prof. Ashok Bodke

5. Topic of Presentation : Cost Audit

6. Mob no. : 9175021770 Email: [email protected]


Introduction
Cost Audit is the detailed checking as well
as verification of the correctness of costing
techniques, systems and cost accounts. It
ensures the adherence of the cost
accounting plan. India is the only country,
which has introduced statutory cost audit to
regulate the important industries on healthy
and efficient lines.
Meaning and Definition of Cost
Audit
• Meaning :-
Cost Audit implies Audit of Cost records. Cost auditor
authenticates
Cost records of the company and establishes whether
Cost accounting
plan is properly adhered to as laid down by
management.
According to I.C.W.A. of India, Cost Audit can be defined
as follows:-
“Cost Audit is an Audit of efficiency of minute details
of expenditure while the work is in progress and a post-
Meaning and definition of Cost
Auditor
• Meaning :-
Cost Auditor means Cost accountant in practice and includes a
firm of
of Cost accountants or a limited liability partnership firm
appointed
to conduct audit of Cost records.

The Chartered Institute of management accountant of U.K. :-


“ Cost auditor does the verification of Cost accounts and a check
on
adherence to the Cost accounting plan.”
Qualifications of cost auditor
Only a Cost Accountant, as defined under section
2(28) of the Companies Act, 2013, with valid
certificate of practice is qualified to get appointed
as a cost auditor.
Cost Accountant includes a Firm of Cost
Accountants and a LLP of Cost Accountants.
Clause (b) of sub-section (1) of section 2 of the
Cost and Works Accountants Act, 1959 defines
“Cost Accountant”.
Disqualifications of Cost
Auditor
• A body Corporate.
• Officer or employee of the company
• Partner of, or is in employment of , an officer or
employee of the company.
• Person or his relative or partner who holds security or
interest in the company .
• Person who has given guarantee in connection with
third person.
• Person whose relative is director of the company.
• Person in full employment elsewhere.
Appointment of Cost Auditor
• Cost auditor to be appointed by board of
directors on the recommendation of the audit
committee , where the company is required
to have Audit Committee.
• Such Cost auditor shall give letter of consent
to board of directors.
• Company shall file notice with Central
government of such Appointment of Cost
auditor within prescribed time.
Advantages of Cost Audit
• It provides detailed Information about specific
areas.
• Helps to fix prices of different products.
• Improvement in the process of Cost
Ascertainment
• Profit planning
• Fixes Responsibilities of various officers and
employees.
• Facilities internal check
• It helps in inventory Valuation so that related
Advantages of Cost Audit
• It helps to make correct valuation of all kinds of
inputs and materials.
• It also reveals various facts about particular
things.
• Cost Audit promotes cost conciuosness and
overall efficiency.
• Government can intervene by ordering
compulsory cost audit.
• It helps to reduce prices and increases product
performance.
Scope of Cost Audit
• Service • Work in progress
• Wages and • Capacity
salaries utilization
• Overheads • Inventory
management
• Depreciation
• Production
Objectives of Cost Audit
1. General Objectives :- 1. General objectives:-
• Detection of Errors • Helps in the process
• Ensures maintenance of Cost • Provides useful information
records
• Verify the adequacy of the
• Comment on resources
books • Detect the fraudulent
• Arrive at the value of work in intentions
progress and closing stock • Minimize the cost of
• Verifies total cost essential commodities
• Verifies cost records
• Verify Pricing of inter company
transactions
• Assist and advise the
management
• It serves as a guideline
Objectives of Cost Audit
2. Social objectives :
• Increasing productivity through optimum
utilization of resources
• Price fixation and price control mechanism
• Cost consciousness in both private and public
sector
• Provide benefit to consumers
• Identification of uneconomic product line.

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