Cost Accounting : Cost Audit

1615 Words Sep 15th, 2016 7 Pages
MEANING OF COST AUDIT
Cost audit is basically the analysis of cost accounts and also checking on the efficiency of cost accounts and to ensure that these accounts are matching the predetermined cost accounting plans. It also determines the accuracy of the cost accounts. They also ensure that the accounts conform to the principles, plans, procedures and objectives. It shows the deviation in plans. It is also known as efficiency audit as it checks the efficiency of working of predetermined plans. It consists of the sum total of expenditure and revenue and determines the true work efficiency of a plan. It is used to assess the operational efficiency and resource management of an organisation. It is essentially the verification of the cost accounts so as to ascertain the variations in the efficiency of the organisation.

DEFINITION OF COST AUDIT
The concept of cost audit has been elaborated by ICWA as ‘an audit of efficiency of minute details of expenditure, while the work is in progress and not a post mortem examination. Financial audit is a ‘fait accompli’, cost audit is mainly a preventive measure, a guide for management policy and decision in addition, to being a barometer of performance’. (ref. yourrticlelibrary.com)
Cost Audit may be defined as "the verification of cost records and accounts and a check on the adherence to the prescribed cost accounting procedures and the continuing relevance of such procedures.”(Ref. A Textbook of Financial Cost and Management…

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