Cost audit

How does Cost Audit and Management Audit differ? How much does an audit cost? What is the average audit fee? Is an audit required for a company?

Cost Audit represents the verification of cost accounts and check on the adherence to cost accounting plan. Cost Audit ascertain the accuracy of cost accounting records to ensure that they are in conformity with Cost Accounting principles, plans, procedures and objective.

It is noteworthy that India is the only country which has introduced statutory cost audit to regulate about vital industries of the country. Cost audit as the name suggests is an audit of cost records. Cost accounting determines both fixed and variable costs associated with a product line to determine the break even point, and then ultimately the profit.

The break even point represents the point at which expenses are covered by sales. Rule 6(6) substituted to provide filing of cost audit report in form CRA-4-XBRL within days of receipt. Cost accounting is defined as a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail.

It includes methods for recognizing, classifying, allocating, aggregating and reporting such costs and comparing them with standard costs. Fixed costs are costs that don’t change with the increase or decrease of production units.

That means these costs remain similar within a broad range of the spectrum. Plus, the per unit fixed cost changes as the production increases or decreases. Basic Function: The cost accountant position is accountable for the ongoing analysis of process constraints, target costing projects, margin analysis, and tracing costs back to underlying activities.

The cost accountant must also construct and monitor those cost -effective data accumulation systems needed to provide an appropriate level of costing information to management. Microvista Technologies is a premier software company with global delivery engine that houses a team of highly inspire creative, talented and dedicated professionals, who leverage best practices, proven expertise and resources to deliver the best in class services and products to our clients. Check Cost Audit Applicability.

Its primary function is to ascertain and control costs. The Council On State Taxation ( COST ) and the State Tax Research Institute (STRI) are pleased to announce the release of the seventeenth annual study of state and local business taxes. Definition of cost audit : An internal audit used for enterprise governance to assess operational efficiencies and resource management. Special attention is given to verification of cost records and adherence to acceptable cost. IMPORTANCE, NEED AND PURPOSE OF COST AUDIT.

Here are several basic ways in which to use cost accounting: Product costs. Determine just the variable costs associated with a product and aggregate this information by product. Cost Accounting is a method that records and analyses the cost incurred (per unit) during the production of goods.

A cost accountant holding certificate of practiced on part time basis is not entitled to conduct cost audit. Thus, only a cost accountant in whole-time practice can conduct cost audit. A method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collecte classifie and recorded.

This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible.

Cost accounting assists management to plan and control the business through budgeting for operations, capital budgeting for expanding operations, standard costing and the reporting of variances, transfer pricing, etc. Special analyses includes cost behavior, cost -volume-profit relationships, make or buy decisions, selling prices for products, activity-based costing, and more. In cost accounting, costs are absorbed on pre-determined rate. It leads to over absorption or under absorption of overheads.

Cost Accounting fails to solve the problems relating to work study, time and motion study and operation research. Installation of Cost Accounting System requires the maintenance of many costing records. If in heavy expenditure.