Cost Audit is the process of ascertaining whether the production, marketing and sales processes as well as other aspects of a business are managed in the most cost effective way. This is essentially an Internal Audit and is done as a tool for optimising management efficiency. The most important benefit is the location of unseen leaks in revenues or unproductive or under- productive employment of resources
It is mandatory if the Business is under scrutiny by a financial institution or regulator on the basis of complaints of mismanagement. Always it is desirable to have a Cost audit done periodically, to prevent the situation getting out of control, and to help the management to take prompt action where necessary.
COST AUDIT BRANCH: A BRIEF PROFILE
Cost Audit Branch (CAB) under the Department of Company Affairs is manned by the finance professionals drawn from the Indian Cost Accounting Service (ICAS) and primarily deals with section 209(1)(d) and 233B of the Companies Act, 1956.
1. Matters falling under section 209(1) (d) of the Companies Act, 1956:
* Prescription of Cost Accounting Records Rules in respect of various industries / products. * Rationalization of existing Cost Accounting Record Rules to reflect the changes in Technology. Manufacturing processes and Accounting Standards. * Holding of meeting of Informal Advisory Committee, which includes all the three professional Institutes (ICAI, ICSI, ICWAI), Tariff Commission and Ministry of Finance etc. for finalization of amendments in the aforesaid Rules. *Lying off notified rules in both the Houses of Parliament after Legal vetting and publication in the Gazette.
2. Matters falling under section 233 B. of the companies act, 1956:
* Framing / Amendments in Cost Audit (Report) Rules.
* Issue of Cost Audit Orders on eligible companies.
* Processing of applications (Form 23 C) for approval of appointment of Cost Auditors for each year as proposed by the companies * Processing of...
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