Cost Audit

Cost Audit 

 

Cost Audit is auditing of cost records to comment whether they are properly maintained so as to give a true and fair view of the cost of production, cost of sales and margin of product. The cost audit is a critical examination on maintenance of cost records to express an opinion on their adequacy, truth and fairness, compliance to cost accounting principles. The audit involves elements of propriety in as much as the report contains the auditor’s observation and suggestions on matters required to be commented

Definition

Smith and Day define the term ‘Cost Audit’ is meant “the detailed checking of the costing system, technique and accounts to verify their correctness and to ensure adherence to the objective of cost accountancy”