Cost Audit

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Cost Audit

COST AUDIT

 

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.

MAINTENANCE OF COST RECORDS:

Realizing the importance of proper [1] cost record and control, section 148(1) provides that Central Government can direct that particulars relating to the utilization of material or labour or to other item of cost as may be prescribed shall also be included in the books of account kept by that class of Companies.

COST AUDITOR:

Who can be appointing as cost auditor:

  1. A cost Accountant in practice or a firm of cost accountants can be appointed as a cost auditor.
  2. 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.

 

Applicability of Cost Audit:

Out of the companies required to maintain cost records as per Rule 3, the following companies shall have its records audited annually:

 

Item A   

  1. Every company having annual turnover from all its products and services in the immediately preceding financial year of Rs. 50 crore or more and
  2. The aggregate turnover of the individual product or products or service or services of Rs. 25 crore or more.

 

Item B

  1. Every company having annual turnover from all its products and services in the immediately preceding financial year of Rs. 100 crore or more and
  2. The aggregate turnover of the individual product or products or service or services of Rs. 35 crore or more.

 

 

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