types of expense audit dissertation

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• Cost Review to assist Managing: The main subject of this type of cost examine is to make available accurate, relevant and immediate information to management to assist it in taking important bureaucratic decisions.
• Cost Audit on behalf of the Federal government: The government may appoint a cost auditor to conduct cost review where it is necessary

(a) to do so in the thoughts and opinions of the government under section 233-B of the companies Work, 1956;

(b) to ascertain accurate cost of certain units the moment government is approached for safety or financial support;

( right cost of contract given to private firms underneath cost as well as basis;

(d) to fix reasonable prices of certain products of production so as to prevent undue making money.

• Cost Taxation on behalf of a customer: Sometimes, expense audit may be conducted on behalf of a customer the moment he agrees to pay price intended for a certain product on ‘cost plus’ basis

A.  Advantages Of Cost Review To The Supervision

1. Expense audit supplies reliable cost data for managerial decisions.

2. Cost taxation helps supervision to regulate production.
3. Cost audit acts as an effective managerial instrument for the detection of errors, frauds and irregularities so that reliable and smooth performing of the system is continued.
4. Price audit decreases the cost of production through plugging loopholes relating to wastage of material, labor and overheads.
5. Cost audit may fix the obligation of an individual anywhere irregularities or wastage are found.
6. Cost audit boosts efficiency of the organization as a whole and being system in particular by constant review, revision and checking or routine procedures and methods.
7. Price audit helps in comparing genuine results with budgeted effects and points out the areas wherever management action is more needed.
8. Cost taxation also allows comparison between different models of the stock in order to find out the profitability of the diverse units.
9. Cost audit exercises moral influence on employees which keeps them successful and inform.
10. Cost examine ensures that the fee accounts have been maintained in accordance with the guidelines of costing used in the industry concerned.

B.  Advantages Of Cost Review To The Shareholders

1. Price audit ensures that proper documents are maintained as to purchases, usage of materials and expenses incurred on various products i. at the wages and overheads and so forth It also makes certain that the industrial product has been working successfully and monetarily.
2. The cost review enables investors to determine whether or not they are really getting a fair return on their investments. It reflects managerial performance or inefficiency.
3. Expense audit ensures a true picture of company’s state of affairs. It reveals whether the solutions like plant and equipment are being properly utilized or not.

C.  Advantages Of Cost Taxation To The Contemporary society

1. Cost audit explains to the true cost of production. From this the consumer may know if the market price of the article is fair or not. The customer is saved from your exploitation.
2. Expense audit increases the performance of industrial devices and thereby assists in economic progress of the nation.
3. Since price boost by the industry is not allowed without justification as to increase in cost of production, consumers can maintain their common of living.

D.  Advantages Of Cost Examine To The Government

1. Price audit assists the ‘Tariff Board’ in deciding whether tariff protection should certainly be extended to a particular industry or not.
2. Cost taxation helps to ascertain whether any kind of particular market should be given any subsidy in order to develop that market.
3. Cost review provides dependable data to the government pertaining to fixing up the setting rates of the several commodities.
4. Price audit will help the government to take necessary procedures to improve the efficiency of sick industrial products.
5. Cost examine can uncover the deceptive intentions of the management.
6. Price statements may possibly be helpful to authorities in imposing taxes or duty at the cost of finished products.
7. Price audit helps settlement of trade disputes of the companies.

Difference b/w Cost Examine and Economic audit:

The standard nature of audit is checking and it holds best for both the cost review as well as the financial taxation. However next are the factors of difference between these two audits:

1. Mandatory nature. Economic audit is compulsory for all the corporations registered beneath companies act, 1956. Price audit is not compulsory for those companies. Simply in the case of manufacturing or mining companies they have been specifically asked by the central government to maintain cost accounts under section 209 and get these accounts audited under section 233b.
2. Purpose. The purpose of the financial audit is to report on the profit and loss account and “balance sheet” as to whether that they show authentic and reasonable view of the business or not. The purpose of the cost review is to certify that whether the spending incurred on the production of items has been sustained prudently or not.
3. Expression of opinion. The economical auditor provides to comment upon the accuracy of the ventures recorded and the cost auditor has to comment upon the correctness and wise ness of the decisions taken in production of items.
4. Illustration. Financial examine is conducted at the instance of the shareholders. Expense audit is done at the need of third get-togethers like federal government, industrial businesses etc .
5. Session. Financial taxation is appointed normally by the shareholders in the general meeting while the panel of directors with all the previous endorsement of the central government appoints a cost auditor.
6. Recurrence. Financial audit is conducted every year while a cost audit may be done in the season in which it is required by the government or any different agency.
7. Inventory. In financial taxation auditor features to check the complete value of closing stock for the purpose of balance bed sheet, whereas in the cost taxation the auditor has to check the adequacy of the stock keeping in view of the requirements of the concern.
8. Report. In the financial audit the survey is submitted to the management to be laid in the standard meeting of the shareholders, the report of the cost auditor is submitted to the company and also to the central government inside 180 times from the end of the business financial 12 months to which the cost audit

In simple words, the term expense audit means a systematic and accurate confirmation of the cost accounts and records and checking of adherence to the objectives of cost accounting.

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