Types of Cost Audit Essay

  • Cost Audit to assist Management: The main object of this type of cost audit is to make available accurate, relevant and prompt information to management to assist it in taking important managerial decisions.
  • Cost Audit on behalf of the Government: The government may appoint a cost auditor to conduct cost audit where it is necessary

(a) to do so in the opinion of the government under section 233-B of the companies Act, 1956;

(b) to ascertain correct cost of certain units when government is approached for protection or financial help;

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(с) to ascertain correct cost of contract given to private firms under cost plus basis;

(d) to fix reasonable prices of certain items of production so as to prevent undue profiteering.

  • Cost Audit on behalf of a customer: Sometimes, cost audit may be conducted on behalf of a customer when he agrees to pay price for a certain product on ‘cost plus’ basis

A. Advantages Of Cost Audit To The Management

  1. Cost audit provides reliable cost data for managerial decisions.

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