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(iii) Evaluation of the operating and other efciencies of the organization under audit with special reference to the product under review; to ensure the submission of necessary details required under the Cost Audit Report Rules, 2001 as amended from time to time. (iv) Submission of Cost Audit Report in the format prescribed. 1.1.4.2 Since cost audit is carried out under the various provisions of the Companies Act, 1956, a thorough and comprehensive knowledge of the Indian Companies Act including various rules prescribed thereunder and the circulars issued by the Ministry of Corporate Affairs is essential for conducting an effective Cost Audit.
1.1.5.2 Among the social objectives of cost audit, the following deserve special mention : Facilitation in xation of reasonable prices of goods and services produced by the enterprise. Improvement in productivity of human, physical and nancial resources of the enterprise. Channelising of the enterprise resources to most optimum, productive and protable areas. Availability of audited cost data as regards contracts containing escalation clauses. Facilitation in settlement of bills in the case of cost-plus contracts entered into by the Government. Pinpointing areas of inefciency and mismanagement, if any for the benet of shareholders, consumers, etc., such that necessary corrective action could be taken in time.
1.2
Provisions Under Companies Act Relating to Maintenance of Cost Records and Cost Audit
1.2.1 The statutory provisions relating to maintenance of cost accounting records and cost audit were initially introduced by the Companies (Amendment) Act, 1965. Section 209(1)(d) deals with the provisions relating of maintenance of cost accounting records and Section 233B deals with the audit of cost accounts in the certain cases. The amended Section 233B provides that the cost audit can be conducted only by those cost accountants, who are not whole time employees elsewhere. These provisions also provides for a ceiling on the number of cost audits that can be carried out by a cost accountant or a rm of cost accountants. These provisions are explained in detail as under:
1.2.1.10 Section 209(7) provides that if any person, not being a person referred to in sub-Section (6), having
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12
(e)
(f)
(g)
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(e)
(f) (g)
(k)
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1.3
(b)
(c)
1.3.3.2 Section 226 of the Companies Act, 1956 provides for the qualications and disqualications of the auditors. Reading of sub-Section (3) of Section 226 implies that the following persons cannot be appointed or reappointed as cost auditor of a company (a) (b) (c) (d) a body corporate; an ofcer or employee of the company; a person who is a partner, or who is in the employment, of an ofcer or employee of the company; a person who is indebted to the company for an amount exceeding one thousand rupees or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the company for an amount exceeding one thousand rupees; a person holding any security of that company after a period of one year from the date of commencement of the Companies (Amendment) Act, 2000. (Explanation: security means an instrument which carries voting rights);
(e)
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1.3.4.3 The Government have also claried (Appendix II-B) that in case a rm of cost accountants is appointed as cost auditors, authentication of the cost audit report is to be done by the signature of any one of the partners of the rm in his own hand for and on behalf of the rm. The report should not be signed by merely afxing rm name. 1.3.4.4 In the case of rms appointed as cost auditors, each partner of the rm who is not in full time employment can hold appointment as cost auditor of the specied number of companies i.e. twenty companies for each such partner who is not in full time employment elsewhere. However, not more than ten such companies should have a paid up share capital of Rs. 25 lakhs or more.
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(b)
18
(b)
1.3.7.4 Explanation II to the Section 224 provides that in computing the specied number, the number of companies in respect of which or any part of which any person or rm has been appointed as an auditor, whether singly or in combination with any other person or rm shall be taken into account. 1.3.7.5 In view of aforesaid provisions, the ceilings on the number of cost audits can be claried as under: (a) In the case of rm of cost accountants: Twenty companies for each such partner of the rm who is not in full time employment. However, not more than ten such companies should have a paid up share capital of Rs. 25 lakhs or more; In the case of an individual cost accountant, who is not in full time employment: Twenty companies, out of which not more than ten should have a paid-up share capital of Rs. 25 lakhs or more.
(b)
1.3.7.6 It can be seen from above that Section 224(1B) and Explanation I to Section 224 refers to the ceilings for the number of companies and not to the number of cost audit orders or products. Therefore, if more than one products of a particular company are covered under cost audit for the same year, a cost auditor should count their number as one company only, since the audits for all the products relate to the same company despite the fact that separate cost audit orders have been issued with respect to each such product. Similarly, if that company appoints different cost auditors for different products, each auditor shall count the company as one company for counting their individual quota for number of audits. 1.3.7.7 It should be noted that the Companies (Amendment) Act, 2000 has inserted a provision (Explanation II) to Section 224, whereby the provisions of sub-section 1-B shall not apply to a Private Company. It means that for computing the limit on number of companies for audit, Private Companies should not be counted.
1.3.8 Number of Cost Audits at any Point of Time and Tenure of Cost Auditor
1.3.8.1 As already stated above, Section 224(1)(B) provides a ceiling on number of audits that a person can hold on the date of appointment or re-appointment i.e. at any point of time. Section 233B(2)
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(b)
(c)
(ii)
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1.3.15 Form 23 Application to The Cost Audit Branch Requesting Approval of Cost Auditor
1.3.15.1 The cost audit orders issued by the Cost Audit Branch normally mention that `the application in the prescribed form no. 23-C proposing for appointment of cost auditor for one term should be electronically lled at the website of department i.e., www.mca.gov.in within 45 days of the date of the order and thereafter within 45 days of the commencement of every nancial year. The application fee is payable along with form 23-C which is presently as under:
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1.3.15.2 The payments can now be made through appropriate mechanisms electronic (credit card, internet banking) or traditional means (at the Bank counter). Electronic payments can also be made at Virtual Front Ofce (VFO). If the user selects the traditional payment option, the system generates a prelled challan in the prescribed format. Traditional payments through cash, cheque can be done at the designated bank branches using the system generated challan.
3.
4.
5. 6.
7.
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1.4
1.4.2.2 Familiarization about the Company and Applicable Record Rules 1.4.2.2(a)
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It is very necessary for the cost auditor to familiarize himself with the requirements of
(vii) Management Information System (viii) Personnel Department (ix) (i) (j) (k) (l) Internal audit department
Copies of budget manual; Flow charts and description of manufacturing process; Major raw materials with quantitative details for each unit of nished output; Labor incentive schemes, if any;
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1.4.2.3(b) In case of repeat audit engagements, most of the aforesaid information would be available with the cost auditor, which would then be appropriately updated. 1.4.2.4 Evaluation of Internal Control Procedures and System 1.4.2.4(a) The evaluation of internal control procedures and systems provides a reasonable assurance to the cost auditor. This evaluation helps in identifying the strong points as well as the weak points of the internal control system. This will facilitate setting up of materiality levels and designing of audit programme accordingly. The cost auditor may conne his checks and audit procedures to a representative sample, if these internal control procedures are effective. This will help in reducing the avoidable verication of each and every transaction, which will be not only very time consuming but costly as well.
1.4.4.5 The cost auditor prepares the cost audit report under the Cost Audit Report Rules, 2001 after reviewing the cost accounting records and detailed verication of the cost proformae, annexures, cost statements and other nancial data submitted by the company to the cost auditor.
1.4.5.2 The working papers should record the cost audit plan, the timing, nature and extent of the audit procedures performed and the conclusions derived from the evidence obtained. The working papers serve as an important proof regarding the way evidence was found, analyzed and veriable conclusion drawn. 1.4.5.3 Whenever any question is raised or a clarication is desired by the Central Government regarding any point, the cost auditor can reply properly if the audit working papers are properly kept. Such working papers will help the cost auditor in cost audit of that company during subsequent years also. The working papers should be cross-indexed in such a manner that required information could be obtained with minimum delay. The working papers may be arranged properly according to Para numbers of the Annexure to the Cost Audit Report Rules.
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Raw materials stores etc. : (a) (b) (c) Goods received register. Bin cards and stores ledger. Material consumption and stock reports.
(3)
Utilities (Steam, power & water) : (a) (b) (c) Records of inputs and outputs. Records of cost centre-wise allocation of products. Records for own generated power and purchased power.
(4)
Wages and Salaries : (a) (b) (c) (d) Attendance registers. Payroll. Leave wages and gratuity payments. Overtime and idle time records.
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(7)
Work-in-progress and nished goods : (a) (b) Cost centre-wise/product-wise stock register. Product-wise nished goods register.
(8)
Cost accounts, records and statements : (a) (b) (c) (d) Cost centre-wise assets register. Product ledger. Annexures and proformae as per Cost Accounting Records Rules. Reconciliation of prot/loss as per costing and nancial records.
(9)
Sales : (a) (b) Sales register including export sales register. Sales analysis by products (quality, size, variety-wise).
1.4.6.1 (b) The above mentioned cost records shall be maintained on a regular and continuous basis and not at the end of the year only. 1.4.6.2 Review of Cost Accounting Records by Cost Auditor 1.4.6.2(a) The cost auditor during the course of audit will thoroughly review the cost accounting records. Such review and verication may include : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Methods of costing in use batch, job, process etc. System of xation of cost centres. Procedures for accounting of raw materials, packing materials, and spares, etc. Methods of accounting of wastes, rejections and defectives. System of recording of wages, salaries and overtime and their allocation. Incentive schemes in vogue. Basis of allocation/apportionment of utilities. Method of accounting for depreciation and charging depreciation to cost centres. Method of apportionment/allocation of service department expenses. Basis of reapportionment of service department expenses to production departments. Basis of absorption of overheads to products.
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1.4.6.2(b) If the company has manual for cost accounting, the cost auditor should study the manual thoroughly. 1.4.6.3 Verication of Cost Proformae and Annexures 1.4.6.3(a) The cost auditor has to examine all the cost accounting records, cost statements, other books and documents, annexures and proforma to the report and other relevant data in course of his audit work. Such examination of the cost and nancial statements by the cost auditor may include the following 1. 2. 3. Financial position including nancial ratios as required to be stated in Para 24 of the Annexures to the Cost Audit Report Rules. Licensed capacity, installed capacity, production and capacity utilized (Para 4). Consumption of raw materials, power and fuel, salary and wages, stores and spare parts, provision for depreciation, expenditure on overheads, royalty and technical know-how charges, quality control expenses, pollution control expenses, abnormal non-recurring costs and other items. Sales realization local and export unit and total for each variety of product. Cost proformae maintained by the company as per cost accounting records rules. Reconciliation with nancial books.
4. 5. 6.
1.4.6.3(b) As mentioned earlier, the examination of cost proformae as per provisions contained in relevant cost accounting records rules and other items mentioned above may commence only after the end of the accounting year when all the closing entries are passed through the books of account.
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1.4.12.2 This helps in identifying a) b) c) d) e) The division of responsibilities of the different departments. The source of document whose error would be of far reaching consequences. Possible clerical errors that can occur at each stage. It gives a birds eye view of the system and an efcient documentation for the auditors testing it. It is the most efcient tool for doing actual analysis.
However, ow charts might not give the desired results as details are sometime omitted and the individual charts are not properly cross referenced and indexed. Failure to standardize the symbols and incomplete nature of the chart fails to give desired results.
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Appendix I - A
Specimen of Cost Audit Order
Dated ............. ORDER Whereas in the opinion of the Central Government, it is necessary to conduct an audit of the cost accounts M/s...........................LTD. (hereinafter referred to as the Company) required under clause (d) of subSection (1) of Section 209 of the Companies Act, 1956 (1 of 1956) so as to include in its books of accounts the particulars referred to therein, now in exercise of the powers conferred by sub-Section (1) of Section 233 B of the Companies Act,1956 (1 of 1956), the (Central Government hereby directs that an audit of the cost accounts maintained by the Company in respect of ............................(Name of the Product) for the year ending .......... and also for every nancial year thereafter continuously be conducted by an auditor with the qualications prescribed in Section 233B(1) aforesaid, until further orders. 2. The application in the prescribed Form No. 23-C proposing for appointment of Cost Auditor for ONE TERM should be e-led to this Department Within forty ve days of the date of this order and thereafter within forty ve days of the commencement of every nancial year. It may be noted that the Cost Auditor proposed shall be an individual or a partnership rm of Cost Accountants, provided the rm is constituted with the previous approval of the Council of the Institute of Cost and Works Accountants of India under Regulation 113 of the Cost and Works Accountants Regulations, 1959. The application fee of Rs. 500, Rs. 1000 or Rs. 2000 if the nominal share capital of your company is less than Rs. 25 Lakh, Rs. 25 Lakh or more but less than Rs. 5 crores and Rs. 5 crores or more respectively should be remitted in the manner mentioned hereunder (a) Remittances may be made by means of challan which must be on authorised branches of PUNJAB NATIONAL BANK only and not on any other bank. The head of account to be indicated is 104 -other General Economic Service, Regulation of Joint Stock Companies -Fees realised by the Central Government on application made to it under the Companies Act, 1956 adjustable by the Pay & Accounts Ofcer, Department of Company Affairs, New Delhi. The original copy of challan shall be sent along with the application Remittance can also be made by means of demand draft drawn in favour of the Pay & Accounts Ofcer. Department of Company Affairs, New Delhi on any nationalised bank in Delhi (preferably on the Punjab National Bank, Barakhamba Road, New Delhi) and demand draft should be sent to this Department along with the prescribed documents.
(b)
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4.
Director ( Cost)
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Appendix I - B
FORMAT FOR WRITTEN CERTIFICATE UNDER SEC. 233B(2)/224(1B) IN CASE OF AN INDIVIDUAL/ PROPRIETARY FIRM. Date --------------------
The Board of Directors ABC Ltd. 1, X Street, Calcutta 700 001. Dear Sirs, I hereby certify that my appointment as Cost Auditor for the audit of Cost Accounts maintained by your Company relating to .......................................(PRODUCT UNDER REFERENCE) for the year ............, will be in accordance within the limits specied in sub-Section (1-B ) of Section 224 read with sub-Section (2) of Section 233B of the Companies Act, 1956. I hereby declare that, I am not in full time employment as a cost accountant within the meaning of Cost and Works Accountants Act, 1959 ( 23 of 1959) and I am holding a valid certicate of practice. Thanking You, Yours faithfully ( )
------------------------------------------------------------------------------------------------------------------------------------------IN CASE OF A FIRM Date ------------------The Board of Directors ABC Ltd. 1, X Street, Calcutta 700 001. Dear Sirs, We hereby certify that our appointment as Cost Auditors for the audit of Cost Accounts maintained by your Company relating to ..............................(PRODUCT UNDER REFERENCE) for the year ............, will be in accordance within the limits specied in sub-Section (1-B ) of Section 224 read with sub-Section (2) of Section 233B of the Companies Act, 1956. We hereby declare that, none of the partners of our rm are in full time employment as a cost accountant within the meaning of Cost and Works Accountants Act, 1959 ( 23 of 1959) and are holding a valid certicates of practice. We further certify that our rm is constituted with the previous approval of the Central Government under regulation 113 of The Cost and Works Accountants Act, 1959. Thanking You, Yours faithfully For M/s ...................... ( Partner Cost Accountant M.No. ........... )
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1.5.3
Appendix I - C
SPECIMEN BOARD MEETING RESOLUTION
Extract from minutes of the Board Meeting of M/s ........................ Ltd. held at the Registered ofce of the Company on ........................ Tabled the letter No. 52/ /CAB-01 (CLB) dated ........................ , ordering cost audit of ........................., for the year ........................ The Chairman informed the Board that ......................have given their consent to act as cost auditors and laid on the table the certicate received from --------------------It was accordingly Resolved that, pursuant to Section 233B of the Companies Act, 1956 and subject to the approval of the Central Government ............................... be and are hereby appointed as the cost auditors of the company to conduct audit of .............................. (PRODUCT UNDER REFERENCE) manufactured by the company for the year ending on ............... at a remuneration of Rs. ............................ plus out-of-pocket expenses. Further resolved that the secretary of the company be and is hereby directed to submit the necessary application in Form 23-C to the Central Government and to do all such other acts as may be necessary.
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Appendix I - D
Form No. 23-C Form of Application to the Central Government for Appointment of Cost Auditor (s)
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1.5.5
Appendix I - E
SPECIMEN OF APPROVAL FOR APPOINTMENT OF COST AUDITOR No. 52/ /CAB-89 (CLB) GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS BIKANER HOUSE, Hutments No. IV, Shahjahan Road, NEW DELHI - 110 011. Dated .....................
To, M/s ................................................................. .......................................................................... Subject: APPOINTMENT OF COST AUDITOR Dear Sirs, I am directed to refer to your Form 23-C on the above subject and to convey the approval of the Central Government for appointment of Shri . as Cost Auditor of your Company relating to the manufacture of ..................................... (Product under reference) for the year ending ...................... and ...................... subject to the provisions of Section 22 (1B) and Section 233B (5) of the Companies Act, 1956 as amended. 2. In this connection your attention is invited to Rule 7(2) of the Cost Audit (Report) Rules 2001 and also to Section 233-B(7) of the Companies Act, 1956, as amended from time to time. Yours faithfully, (..................) DIRECTOR (COST) Phone: Dated . No. 52/ /CAB-89 (CLB) Copy forwarded for information to : Shri (Cost Auditor) His attention is invited to Rule 7(1) of the Cost Audit (Report) Rules 2001 as amended from time to time. (...............................) Director (Cost) Phone:
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Appendix I - F
DRAFT OF COMMUNICATION WITH PREVIOUS COST AUDITOR (By Regd. A/D.) Date: ..........................
I/We have been approached by M/s. ------------------------------------ to conduct the cost audit relating to the ------------------------(product/service under reference) of the company /unit(s) located at ----------------------for the year ending on -----------. I/We understand that you were the cost auditor of the Company immediately prior to this offer. Accordingly, I hereby communicate to you before I/we accept the said appointment. May I request you to for your feedback on this matter. This communication is being addressed to you in view of the provisions of clause (8) of Part I of the First Schedule to The Cost and Works Accountants Act, 1959. I also hereby conrm that the audit fees that will be received by me/us for this assignment will not be lower than the fees received by you for similar work. Thanking you, Yours faithfully,
Note:
1. 2.
It is suggested to write the letter on an Inland Letter Card. The communication must be addressed by Register A/D.
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1.5.7
Appendix - II (A)
APPOINTMENT OF COST AUDITOR IN FIRMS NAME No. 54/ /80-CAB GOVERNMENT OF INDIA Ministry of Law, Justice and Company Affairs, Department of Company Affairs, Shastri Bhavan, V Floor, A Wing Dr. Rajendra Prasad Road, New Delhi - 100 001.
November 19, 1983 To The President, Institute of Cost & Works, Accountants of India, 12, Sudder Street, Calcutta - 700 016.
Sir, I am directed to state that the question of appointment of Cost Auditors in rms name for conducting cost audit has been under examination in the department and it has been decided to approve the appointment of Cost Auditors in rms name under sub-Section (2) of Section 233B of the Companies Act, 1956, if such a proposal is received from the Board of Directors of any company subject to the following conditions :(i) (ii) All the partners of the rm are practising cost accountants within the meaning of Sections 6 and 7 of the Cost and Works Accountants 1959, and The rm itself has been constituted with the previous approval of the Central Government as required under Regulation 113 of the Cost and Works Accountants Act, 1959.
2.
It is requested that the above decision may be brought to the notice of practising cost accountants through the journal of the Institute of Cost and Works Accountants of India.
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Appendix - II (B)
No. 52/409/80-CAB GOVERNMENT OF INDIA Ministry of Law, Justice and Company Affairs, Cost Audit Branch 801, Kanchenjunga Bldg., Barakhamaba Road, New Delhi.
To The President, Institute of Cost & Works Accountants of India, 12, Sudder Street, Calcutta - 700 016.
Sub :-
Authentication of Cost Audit Report in cases where a rm of Cost Auditors is approved u/s 233B (2) of the Companies Act. 1956. for conducting cost audit.
Sir, I am directed to refer to this Departments letter of even number dated 19.11.83 intimating the decision of the Department regarding the approval for appointment of cost auditors in rms name under subSection (2) of Section 233B of the Companies Act, 1956. 2. In case where a rm of Cost Auditors is approved for appointment under sub-Section (2) of Section 233B ibid, the Cost Audit report shall be signed by any one of the partners of the rm responsible for the conduct of Cost Audit in his own hand, for and on behalf of the rm, which has been approved for appointment as cost auditors of the company. In any case the report should not be signed by merely afxing the rms name. The above position may be brought to the notice of all practising Cost Accountants, through the Journal of the Institute. The receipt of this letter may please be acknowledged and a copy of the Journal wherein it is published may be sent to this Department for information.
3. 4.
Yours Faithfully,
1.5.9
Appendix - II (C)
Section 224 (1-B) & 233-B OF THE COMPANIES ACT, 1956 : A CLARIFICATION
Sub: Clarications relating to sub-Section (1 B) of Section 224 and sub-Section (2) of Section 233 B of the Companies Act, 1956 regarding the appointment of Cost Auditor. In the application of the amended provisions of the Companies Act, 1956 relating to the amendment to Section 233 B (2) of the Act, the following points are hereby claried :(i) U/s 233B of the Act, the Cost Auditor is appointed by the Board of Directors of the Company with the previous approval of the Central Government. According to sub-Section (2) of S. 233B ibid, the Board ~ can make an appointment of the Cost Auditor only after obtaining a written certicate from him that his appointment if made will be in accordance with the provisions of sub-Section (1 B) of Section 224 of the Act.The Cost Auditor can give such a certicate only if he does not exceed the specied number of audits , prescribed u/s 224 of the Act. As the appointment of Cost Auditor has to be made by the Board of Directors of the company after obtaining the previous approval of the Central Government, the appointment of an auditor is complete only when the company intimates in writing to the Cost Auditor that he has been appointed. Therefore, the Cost Auditor at the time of furnishing a certicate u/s 233 B(2) of the Act will have to take into consideration only the number of companies for which he holds rm letters of appointment from various companies, as Cost Auditor. (ii) Under the provision of Section 233B of the Act and the Cost Audit Report Rules made thereunder, the Cost Auditor after the submission of the Cost Audit Report has to furnish replies to all the supplementaries, queries from the Department of Company affairs arising through a review of the Cost Audit Report. A question has arisen as to when the term of a Cost Auditor in respect of company shall be deemed to have concluded. It is claried that for the purpose of furnishing the certicate under sub-Section (2) of Section 233B of the Act, a Cost Auditor shall be deemed to have concluded his appointment as soon as he renders a report to the Central Government in accordance with the Cost Audit Report Rules, with a copy to the company. His obligation to answer queries from the Company Law Board arising out of review of cost audit reports should not debar him from accepting another appointment as Cost Auditor of a company provided the specied number of companies contemplated in Section 224 (1) (B) is not exceeded. The above clarication may be published in the Journal of the Institute of Cost and Works Accountants of India at an early date.
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Appendix - II (D)
CLARIFICATION UNDER Section 224 (1B) OFTHE COMPANIES ACT, 1956 No. 35/1/90-CL.III Government of India, Ministry of Industry Department of Company Affairs Shastri Bhavan, 5th Floor, A Wing New Delhi. Dated 2nd March 1990.
To,
The President, The Institute of Chartered Accountants of India, Post Box No. 7100, Indraprastha Marg, New Delhi-110 002.
Subject: Clarication under Section 224 (1) of the Companies Act, 1956.
Sir, I am directed to refer to your letter No. CLC/79/89 dated 8th January, 1990 on the subject mentioned above and to say that while giving a certicate in terms of provision to sub-Section (1) of Section 224 of the Companies Act, 1956, the auditor or auditors will not only take into account the actual appointments as auditors in the companies but also their proposed appointments in companies for which they have given their consent.
Yours faithfully,
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1.5.11
Appendix - II (E)
CLARIFICATION UNDER Section 224(1B) OF THE COMPANIES ACT, 1956 No. 3/8/89-CL. V. Government of India Ministry of Industry Department of Company Affairs Shastri Bhavan, 5th Floor, A Wing Dr. R.P. Road, New Delhl - 1. the 5th March, 1990
To, The Institute of Cost & Works Accountants of India ICWAI Bhavan, 3, Institutional Area, Lodi Road, New Delhi.
Subject: Clarication under Section 224(1B) of the Companies Act, 1956 read with Section 233 of the Act.
Sir, I am directed to refer to your letter No. PD/69/90 dated 19-2-1990 on the subject mentioned above and to say that the cost auditor shall be deemed to have concluded his appointment as soon as he renders a report to the Central Government in accordance with the cost Audit Report Rules. The specied number of companies for the purpose of Section 233B(2) of the Act is to be computed with reference to the number of Companies wherein he is appointed as cost auditor and in respect of which reports is yet to be submitted. The number of companies in respect of which reports have not been submitted should be taken into account for the purposes of ceiling on cost audit.
Yours faithfully,
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(2)
(4) (5)
50
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Self-examination Questions
What is the origin of Cost Audit in India? What are the salient features of Cost Audit? How is it a variance with the nancial audit as contemplated in S. 224 of the Companies Act, 1956? Can you consider Cost Audit (a) as Management Audit, (b) as Social Audit, (c) as Propriety Audit? If so, to what extent? What are the various stages and the procedure in the appointment of a Cost Auditor? List the forms that are normally to be used. Can the Central Government insist on the appointment of a particular person as Cost Auditor, while approval of appointment? When does the term of appointment of Cost Auditor end? What are the limits on the number of audits that a Cost Auditor can take at a time? How is the limit operated in the case of multi-product companies, all subject to Cost Audit? What are the rights and responsibilities of a Cost Auditor? What are the disqualications of a Cost Auditor? Can a rm of Cost Accountants be appointed as Cost Auditor? If so, under what conditions? You have been appointed as the Cost Auditor of an industrial undertaking covered under Cost Accounting Records Rules. The industry is new to you. What preparations and knowledge would you consider necessary while planning its cost audit? In planning to take up a cost audit of a unit what documents and information should a cost auditor take note of? What do you understand by structuring the audit? Discuss the importance of audit programme, audit working papers and checking including test check. Write explanatory notes on the following techniques used in auditing (a) Flow charts, (b) Statistical sampling, (c) Ratio analysis. Write briey about review of cost accounting records by cost auditor during the course of audit. A cost auditor has to examine all the cost records, cost statements and nancial statements and other relevant data in the course of his audit work. Discuss. Mention the guidelines relating to rendition of cost audit report. Discuss the provision relating to supplementary report.
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