Cost Audit is the verification of accounts and cost records and a careful compliance accounting process. It is performed by an independent, professionally qualified Cost and Management Accountant or Chartered Accountant. The cost auditor should inquire whether there is a good and efficient system of internal check especially as records the receipt and issue of ram materials and stores to different department units or jobs. It is performed by an independent, professionally qualified Cost and Management Accountant or Chartered Accountant. By the term cost audit is meant the detailed checking of the costing system technique and accounts to verify their correctness and to ensure adherence to the objective of cost accountancy.
He should make the following inquiries.
(a) Whether goods received notes for all material applied by the appliers to the company are received and record.
(b) Whether package containing goods when received are opened in the presence of a responsible official of the company.
(c) Whether the stores requisitions from different departments and sections are ermined by the storekeeper as regards the competency of the requisition.
(d) Whether weighing machines in the stores department arc regularly checked and properly maintained.
(e) Whether such losses are assessed by the inspector whether the loss or the damage is reported.
(f) Whether known losses or shortages tram whether cast is reported at once to the authorities concerned.