In simple words the term cost audit means a systematic and accurate verification of the cost accounts and records and checking of adherence to the objectives of the cost accounting. As per ICWA London “ cost audit is the verification of the correctness of cost accounts and of the adherence to the cost accounting plan.” [...]

The basic nature of audit is checking and it holds good for both the cost audit as well as the financial audit. However following are the points of difference between these two audits: 1. Compulsory nature – Financial audit is compulsory for all the companies registered under companies act, 1956. Cost audit is not compulsory [...]

There are certain special circumstances of the edp audit which make it different form other manual audit which make it different from other manual audits. These are discussed in brief below: • Absence of audit trail – In the computerized accounting and processing it is possible that there may not exist the proper working sequence [...]

In an EDP (ELECTRONIC DATA PROCISSING) audit the auditor may not vouch each and every transaction but he must perform overall analytical checking to ensure that the financial records show true and fair view of the business entity. Audit process in such a system may involve following steps: Evaluation of the internal control system – [...]

Internal control is a whole system of controls financial and otherwise, established by the management for the smooth running of business; it includes internal cheek, internal audit and other forms of controls. According to sap-6 entitled, “Study and evolution of the accounting system and related internal control may be defined as “ the plan of [...]

Division of work – a work job should be divided into small parts and every part of the job should be allotted to a different worker. No one person should be allowed to handle a complete job. Work rotation – The job among the clerks should be rotated over a period of time so that [...]

Following are the main points of difference between internal audit and statutory audit: 1. Appointment – The management of the organization makes the appointment of an internal auditor. The statutory auditor is appointed by different authorities. First statutory auditors are appointed by the shareholders in the annual general meeting. 2. Qualification – Qualifications of the [...]

Internal check system is such a system in which duties of different assistants are divided and allocated to each other in such a way that their work is supplementary and dependent upon each other. By this system the work is automatically checked as it is done. Since one particular job is not assigned to any [...]

Internal Control – Internal control system is best regarded as the whole system of controls financial and otherwise made by the management in the conduct of a business entity which include internal check system, internal audit and other forms of controls. The management lays down internal control. This system contains plan methods and procedures of [...]

The relationship of the internal auditor and statutory auditor can be summed up as follows: – 1. As per manufacturing and other companies order 1988 issued under section 227 of the companies’ act the statutory auditor has to comment upon the effectiveness and suitability of internal audit system laid down be the management. 2. To [...]