COST AUDIT AND MANAGEMENT AUDIT- ALL YOU NEED TO KNOW
A cost audit is an audit of cost records on utilization of materials, labor, overheads, and other items of cost applicable to the production of goods. On the other hand, management audit has a much wider scope and it deals with the assessment of all managerial functions in a company.
In the context of accounting, an audit is the systematic examination of the books, vouchers, and records of a business to enable the auditor to report whether the accounts are properly drawn up (i.e., so as to exhibit a true and fair view of the company’s state of affairs).
Initially, the scope of audits was limited to verifying official transactions. However, more recently, it has been extended to other fields, including cost audit. Cost audits seek to verify the correctness of cost records or cost accounts.
Cost audit is an examination of the efficiency of the minute details of expenditure while the work is in progress; it does not constitute a post-mortem examination. The cost auditor can be appointed by the board of directors by taking prior permission of the central government. The cost auditor enjoys all the rights of a financial auditor.Ultimately, cost audits are valuable for decision-making, price determination, internal control……
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