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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.Cost audits involve verifying the accuracy of cost reports, statements, data, and cost accounting techniques.
Maintenance of records such as job cards, cost ledger, work order, etc. and their costing method.
Helps too identify the weaknesses and inefficiencies of management in different functional areas, such as production, sales, finance etc.
In a financial audit, plant utilization and capacity utilization are not considered in detail. Under this category, the cost of auditor’s examination covers total available hours, standards hours, planned hours, and actual hours worked.
Management audit suggests ways to utilize the resources of the organization effectively.
Reports on daily production, outlines from daily to monthly, monthly to yearly, comparison with ended records, and budgeted targets consisting of unusual losses, work-in-progress, etc.
Management auditors requires information for the appraisal of various Managerial aspects.All information about the company will be collected.
The Management auditors should carefully examine the information may also be required to reach certain conclusions. The information should be carefully studied to ascertain the real position of organisation.
The information collected by management auditor should be compared with the objects and standards set earlier. Sometimes, information is compared with that of previous years. This will give on idea of actual performance of the entetprise. This will help in assessing the comparative performance of the unit.
The auditor prepares a report detailing the findings of the audit. Included in the report are mathematical errors, posting problems, payments authorized but not paid and other discrepancies; other audit concerns are also listed. The auditor then writes up a commentary describing the findings of the audit and recommended solutions to any problems.