Cost Audit and Management Audit

Cost Audit and Management Audit:


Cost audit report and the information to be furnished therein is prescribed by the Central
Government. However, most of the information contained in the cost audit report is relevant for
making managerial decisions. Normally a management audit is an audit for the management and
by the management. Such audit looks into the economy and the effectiveness of performance of
various activities of an organization. Cost audit also looks into the effectiveness of performance and
effi ciency in various areas such as capacity, input costs of materials, utilities and other controllable
areas so far as the manufacturing aspect is concerned. Detailed information on these areas has
to be given in the cost audit report by the cost auditor comparing it with the standards and past
actuals wherever necessary. Since Cost Audit is very useful to the management as it points out
areas where performance can be improved, it can be called an audit for the management. Though
cost audit is not done at the behest of the management, it does not change its character from being
a management tool.