Features of Cost Audit

Features of Cost Audit:


The cost audit of the companies under the relevant provisions of the Companies Act, 1956 has the
following features:
(i) Assessing compliance of the relevant cost accounting records rules as applicable to the product
under review;
(ii) Study of the costing system to assess whether it is adequate for the cost ascertainment of the
product under review;
(iii) Evaluation of the operating and other effi ciencies of the organization under audit with special
reference to the product under review; to ensure the submission of necessary details required
under the Cost Audit Report Rules, 2001 as amended from time to time.
(iv) Submission of Cost Audit Report in the format prescribed.


Since cost audit is carried out under the various provisions of the Companies Act, 1956, a thorough
and comprehensive knowledge of the Indian Companies Act including various rules prescribed
thereunder and the circulars issued by the Ministry of Corporate Affairs is essential for conducting
an effective Cost Audit