Cost Audit comprises of verification of cost accounting records and examines the accuracy of such records ensuring adherence to the cost accounting standards and principles. Through cost audit an opinion can be generated on the adequacy of controls deployed within the organization’s environment to evaluate and improve the effectiveness of risk management, control and governance processes. Cost audit ascertains that the processes of a business are being managed effectively, resources are used judiciously to avoid wastage and costing system brings out the correct and realistic cost of production or processing. It also provides information which aids the management in decisions related to regulation of production and selection of economical methods of operation. It also serves as an effective tool for detection of errors, frauds and irregularities.
The Indian Companies Act has made provisions to perform cost audit to certain categories of companies engaged in the production processing, manufacturing and mining activities. It has however not been made compulsory for all the companies. Cost audit can be carried out on behalf of management, customer, trade association and government.
Every company responsible for Cost audit shall appoint a cost auditor and file an application with Central Government seeking prior approval for such appointment within 90 days of commencement of every financial year. Any contravention of the provisions of Cost Audit will render the company and every officer in default liable for punishment with appropriate fine and with imprisonment for a reasonable term.
FINMART understands the importance of conducting a cost audit and assists the client in deciding whether cost audit is applicable to them. FINMART has a dedicated team of qualified Cost Accountants for which will assists the client in completing all the statutory obligations related to a Cost Audit.
The applicability of cost audit depends on the Industry in which the user belongs to.
The documents needed vary from case to case. Let FINMART understand your needs and assist you in documents requirement.