way et P enebrabion greed deficiencies important external "weg by | comnpator I inuil ies nee DUSINess” id ib ree bri What Is a Cost Audit? When Is It useful A cost audit finds the link between Costs (A) and a product's price to. find gross margins, making it crucial when the government wants to curb profiteering or tax evasion Price Compliance Costs: Cost Audits increases the burden on the part of cos in covering and conducting cost | i _of audit of so many activities with sharing the cost information through cost audit report to a third party due to fear of data theft eM Rt cd ee LT ene} eee materials, for example, Poe eliura shag em che es Se Rule) Peet ly “Hosting a party would cost more than a cost audit." - Dhananjay Joshi, ex president, ICAI New cost audit rules have consid- erably reduced the disclosure re- quirements and hence addresses the confidentiality issue as wellAdvantages of Cost Audit Advantages tothe Government Advantages | |) Advantages tothe tothe Management | © Shareholders Advantages tothe Society Applicability of maintenance of Cost Records ALL A BOUT I Domestic or Foreign Company Listed in Table of Rule 3 COST RECORD z + — Non-regulated p 0 ST AUDIT Engaged in Production of goods or providing services + COST AUDITOR Overall turnover from all of its products and services 2& 35 crore (preceding financial year)L Verification Variance Analsi \ a Controlling I Estimation Appointment of Cost Ensure system so that Auditor required data can be captured Auditor to complete the Auditor to be ensured audit and directors to zz that data sll be authenticate reports furnished Statutory Auditorto be Auditor to submit fumished copy to Teport to Central Govt reconcile the financial auditGeneral Information Details of Cost Auditor Cost Accounting Policy Product or Service Details eure Annexure | Annexure 2 Annexure 3 Annexure 4 Annexure | Annexure 2 Annexure 3 As Earlier we had to Report as Per Product code now we need to Report as Per CETA Chapter. 2) We also need to state the difference if any as ifthe Turnover as per Excise & Service Tax are different from Financial RecordsRevised procedure notified vide General Circular No. 15/2011 dated 11.04.2011 Company to file form 23C within 90 days of commencement of each financial year along with prescribed fees Documents to be attached to form 23C- 1. Board resolution 2, Certificate u/s 224(1- 8) This procedures effective from FY commencing on or after 01.04.2011 Cost Auditor to be Cost Accountant as per Sec 2{1)(b) of CWA, 1959 and holding certificate of practice Audit Committee to ensure that Cost auditor does not have any disqualifications and should get certificate of independence Form23C deemedto be approved if no communication received within30 days. Company to issue formalletter of appointment after 30 days Penalty For Cost Accountant - Up to Rs. 5000/- For Company & every officer in default - Rs. 500/- plus Rs. 50 per day in case of continuing defalut. Indivudual as well as firm can be appointed as cost auditor Audit committee to be first point of reference for cost auditor appointment Auditor to file form 23D (Intimation of appointment) within 30 days of receipt of appointment letter Particulars of Cost, Auditor to be given in financial statements each yearAUDIT REPORT FORMAT Organization Name Date: Prepared By: Subject: Final Audit Report of: Report of Findings and recommendations of business development of an organization