Review of Cost Accounting Records by Cost Auditor

Review of Cost Accounting Records by Cost Auditor:-


The cost auditor during the course of audit will thoroughly review the cost accounting records.
Such review and verifi cation may include :
1. Methods of costing in use – batch, job, process etc.
2. System of fi xation of cost centres.
3. Procedures for accounting of raw materials, packing materials, and spares, etc.
4. Methods of accounting of wastes, rejections and defectives.
5. System of recording of wages, salaries and overtime and their allocation.
6. Incentive schemes in vogue.
7. Basis of allocation/apportionment of utilities.
8. Method of accounting for depreciation and charging depreciation to cost centres.
9. Method of apportionment/allocation of service department expenses.
10. Basis of reapportionment of service department expenses to production departments.
11. Basis of absorption of overheads to products.

12. Basis of absorption of interest, bonus, gratuity and selling and distribution cost to products.
13. Treatment of research and development expenses.
14. Budgetary control system.
15. Internal audit system.
16. Method of accounting of production and sales.
17. Method of evaluation of work-in-progress.
18. System of stock-taking.
19. Method of valuation of inventories.

(b) If the company has manual for cost accounting, the cost auditor should study the manual
thoroughly.