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Cost Audit

>> November 14, 2012

Cost audit is the detail checking of costing system technique and accounts to verify their correctness and to ensure adherence to objective of cost accounting.

From above definition of cost audit, we can explain it as to check all the cost accounts. After this make the report of cost audit in which cost accountant will confirm that all the cost accounts are correct and proper as per cost accounting standards.

As per the section 233 B of Company Law 1956, there is the provision for cost audit. Under this section, cost audit is compulsory for all the public and govt. companies which are associated with the processing and production.

New Notification Relating to Cost Audit 

As per the new notification of the ministry of corporate affairs dated 2nd may 2011, following company must maintain their cost accounts and audit all these cost accounts  with professional cost accountant.

Companies which are working in following industry

{ Bulk drugs, formulations, fertilizers, sugar, electricity, petroleum, telecommunication.}

If there aggregate value of net worth exceeds 5 crores or total sale exceeds 20 crores, the cost audit is must.

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