When was cost audit introduced?

Cost audit is the independent audit of cost records maintained by companies. The concept of cost audit was introduced in 1965 when Companies Act, 1956 was amended to incorporate the provisions relating to the maintenance of cost accounting records and cost audit.

When was cost audit adopted in India?

Cost Audit was introduced in India in the year 1965.

What is concept of cost audit?

Cost audit is the verification of cost accounts to determine the accuracy of cost accounting records. It is a means to ensure that cost accounting records are in track with the costing principles, plans, procedures and objective. The audit usually involves. Verification that costing records are accurate.

What is cost audit in India?

Companies in India that are operating in certain industries, such as manufacturing, mining, and services are required to undergo a cost audit. A cost audit is the verification of the cost account, and functions as a check on the company's adherence to cost accounting standards.

Who conducted cost audit?

Cost audit shall be conducted by the cost accountant who is appointed by the Board; In case of any default on the part of the company, it shall be punishable with the fine of an amount not less than INR 25,000, however, such fine cannot be more than INR 5 Lakhs.

Cost Audit

Why cost audit is done?

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.

How many types of cost audits are there?

There are two main aspects of cost audit : 1) Propriety Audit : It has been defined as "Audit of executive action and plans bearing on the finance and expenditure of the company". This audit is related to the propriety, i.e., fitness or rightness of the expenditure made.

Which section of the Companies Act 2013 deals with cost audit?

Which provision governs the cost audit? The Section 148 of The Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014 and Cost and Works Accountants Act, 1959.

Is cost audit applicable to NBFC?

Cost audit applicability for Non-Regulated Sectors – Cost audit is applicable if overall turnover of the company is Rs. 100 crore or more and aggregate turnover of individual products or services covered in Table-B is Rs. 35 crore or more in the immediately preceding financial year.

Is cost audit a statutory audit?

While reckoning the experience as statutory auditor, the cost audit conducted under section 148 of the Companies Act, 2013 is not considered as statutory audit.

What is scope of cost audit?

What is the scope of audits? 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.

What are the features of cost audit?

(1) To verify the arithmetical accuracy of cost records. (ii) To detect and prevent frauds and errors. (iii) To ensure that cost accounting procedures specified by the management are followed. (iv) To ensure that principles of costing employed in the concerned industry are followed.

Who can conduct cost audit under the Companies Act 1956?

(2) ¹ The auditor under this section shall be appointed by the Board of directors of the company in accordance with the provisions of sub- section (1B) of section 224 and with the previous approval of the Central Government: Provided that before the appointment of any auditor is made by the Board, a written certificate ...

What is the nature of cost audit in India?

Cost audit helps in detection of errors and frauds. The management gets accurate and reliable data based on which they can make day-to-day decisions like price fixation. It helps in cost control and cost reduction. It facilitates the system of standard costing and budgetary control.

What is qualification of cost auditor?

Qualifications of Cost Auditor

A partner of the firm of cost accountants holding a valid certificate of practice is also qualified to be appointed as the cost auditor of the company. It is essential that such cost accountant or a partner of the firm of cost accountants should not be in the employment elsewhere.

Is cost audit mandatory for all companies?

'Cost Auditing Standards' have been mandated. The Companies (Cost Records and Audit) Rules, 2014 are applicable to every company registered under the Act which are engaged in production of goods or providing of services listed in Table-A or Table-B of Rule 3.

What is Section 143 of Companies Act, 2013?

In accordance with the provisions of section 143(1) of CA, 2013, the auditor have right to access the books of account and vouchers of a company and the records of all its subsidiaries, if any, in relation to the Consolidation of Financial Statements (CFS).

What is Section 148 of Companies Act, 2013?

Section 148 of the Companies Act, 2013: Central Government to specify audit of items of cost in respect of certain companies. Section 148: Central Government to specify audit of items of cost in respect of certain companies.

What is Section 185 of Companies Act, 2013?

Under Section 185 of the Companies Act, 2013, the company cannot provide loans directly or indirectly, including any loans represented by credit cards: To any of its directors. To any other person, the director is interested in. Provide security in respect of loans taken by the director or any such person.

What is the difference between financial audit and cost audit?

Cost audit is an independent examination of the correctness of the cost statements and accounts and its conformity with the cost accounting plan. Financial audit is a systematic unbiased examination of a company or institution's finance books and records, so as to express the opinion on it.

What does CAAT stand for audit?

Computer-assisted audit tool (CAATs) or computer-assisted audit tools and techniques (CAATs) is a growing field within the IT audit profession. CAATs is the practice of using computers to automate the IT audit processes.

Is cost audit compulsory in India?

Statutory Cost Audit:

As per the statutory rules and Act it is mandatory for the Company to carry out the Audit.

Can internal auditor be Cost Auditor?

Cost auditor

All companies to note: Both Chartered Accountants and Cost Accountants are equally eligible for appointment as Internal Auditors under section 138 of the Companies Act 2013.