What is Cost Audit Program?
Cost audit programme is a coordination of the work to be done, the work distributed among the audit staff and the time within which the assignment has to be completed. The cost auditor has to submit his report to the central government with a copy to the company under audit. His programme must have a systematic plan of action so that it is finished within a stipulated time and at a minimum cost. It should include the following verification’s:
- The policies which are followed by the company are in the interest of the company.
- The cost accounts should be maintained as per the provisions of the act.
- The management has been efficient to generate sufficient profits for the company.
- The audit methodology applied while performing the audit.
- The audit opinion is based on the facts supported by proper examination of the relative records.
The points which need special attention in the course of cost audit are:
- Date of commencement of commercial production.
- Cost accounting system is in existence and it is adequate.
- Cost of major raw materials consumed both in terms of quantity and value.
- Incentive schemes with particular references for increasing the productivity.
- Method of depreciation adopted by the company.
- Significant variations in the expenditure incurred against overheads as compared with the previous two years.
- Any other feature affecting the production.