COST AUDIT

DEFINITION:
     Cost audit means audit of cost accounts, which is related with deep checking and verification of accuracy of cost techniques, methods and accounts.
''Cost audit is the verification of cost accounts and check on the adherence to the cost accounting plan''.
''Cost audit can be defined as verification of the correctness of cost accounts and adherence to the cost accounting principles, plan and procedures''.

OBJECTS OR FUNCTION OF COST AUDIT:
following are:
(1) Protective Objects:
  following are:

1. Accuracy of Cost Accounting
2. Adherence of Principles and Procedures
3. Examining the adequacy of the system
4. Pinpointing Deficiencies
5. Verification of Correctness
6. Enforcement of Cost Control
7. Guidance to Management

(2) Constructive Objects:
    following are:

1. To provide useful information and data to management for regulating production.
2. To assist in selection of economical methods of operation.
3. To present suggestions for reducing operational costs.
4. To give suggestions to resolve errors in cost accounts.
5. To provide suggestions and consultancy for cost control.

IMPORTANCE OF COST AUDIT:
following are:

• Reliable data
• Check on Wastages
• Useful in Advanced Techniques
• Cost Consciousness
• Proper Valuation of stock
• Detection of errors and frauds
• Faith in the position of the Company
• Better quality at Reduced cost
• Settlement of Industrial Disputes
• Creation of Healthy Competition