Purposes of Cost Audit

The twin purposes of Cost Audit are:

(i) Protective purpose: Losses and wastages are to be minimized – this is one of the prime objectives of costing – the auditor ahs to examine whether undue losses and wastages have been avoided or not in practice. Besides, the system of costing should portray a realistic picture of costing data.

(ii) Constructive purpose: Management is to be submitted such information which has its utility in regulating production, not only controlling the costs of operations but also reducing them, taking appropriate decisions for product mix etc. and if desired, reformulate the plans after reviewing them. Cost audit has to assume this purpose too.

Alternatively, the following are the functions of Cost Audit:

(i) It verifies that the cost accounts have been correctly maintained and prepared according to the system of cost accounting employed by the concern so as to serve both cost ascertainment and cost control functions.

(ii) It ensures that the costing plan laid down i.e. prescribed routine of cost accounting is being carried out.

(iii) It detects and prevents errors and frauds in preparation of cost records.

Services: - Purposes of Cost Audit Homework | Purposes of Cost Audit Homework Help | Purposes of Cost Audit Homework Help Services | Live Purposes of Cost Audit Homework Help | Purposes of Cost Audit Homework Tutors | Online Purposes of Cost Audit Homework Help | Purposes of Cost Audit Tutors | Online Purposes of Cost Audit Tutors | Purposes of Cost Audit Homework Services | Purposes of Cost Audit