PRESENTED BY

CS SHWETA SHAH
DEPARTMENT OF COMMERCE
PATNA WOMEN’S COLLEGE
COST AUDIT
Cost audit is the specific
application of auditing
principles and procedure
in the field of cost
accounting.
FEATURES OF COST AUDIT
 VERIFICATION OF COST ACCOUNTING
RECORDS
 COST AUDIT ON BEHALF OF CUSTOMERS
 COST AUDIT ON BEHALF OF
GOVERNMENT
 COST AUDIT BY TRADE ASSOCIATIONS
 STATUTORY COST AUDIT
 PRICE FIXATION
 TAX ASSESSMENT
 TRADE DISPUTES
MANAGEMENT AUDIT
 MANAGEMENT AUDIT IS THE AUDIT OF
MANAGEMENT. IT IS THE SYSTEMATIC
INDEPENDENT APPRAISAL ACTIVITY,
WITHIN AN ORGANISATION, FOR A
REVIEW OF THE MANAGEMENT’S
EFFICIENCY, IN ITS DECISION MAKING
FUNCTION.
FEAURES OF MANAGEMENT
AUDIT
 Management accomplishment of organizational
goals
 Appraising management’s functions
 Adequacy of management’s decisions
 Evaluation of effectiveness of the aims, duties and
decisions of management at different levels
 Helps in detecting and overcoming current
problems
TAX AUDIT
 There are various kinds of audit being conducted
under different laws such as company audit/statutory
audit conducted under company law provisions, cost
audit, stock audit etc.
Similarly, income tax law also mandates an audit called
‘Tax Audit’. As the name itself suggests, tax audit is an
examination or review of accounts of any business or
profession carried out by taxpayers from an income
tax viewpoint. It makes the process of income
computation for filing of return of income easier.
FEATURS OF TAX AUDIT
 Ensure proper maintenance and correctness of books of
accounts and certification of the same by a tax auditor
 Reporting observations/discrepancies noted by tax auditor
after a methodical examination of the books of account
 To report prescribed information such as tax depreciation,
compliance of various provisions of income tax law etc.
All these enable tax authorities in verifying the correctness
of income tax returns filed by the taxpayer. Calculation and
verification of total income, claim for deductions etc. also
becomes easier.
 Standards on Auditing

(a)The Council of the ICAI has issued Quality Control and Engagement
Standards.

(b)As per Section 143(2) of the Companies Act 2013, the report of Auditors
should be after taking into account the AUDITING STANDARDS along with
Accounting Standards & provisions of the Companies Act, 2013.

(c) If for any reason, a member has not been able to perform an audit in
accordance with the applicable Auditing Standards, the report should draw
attention to the material departures therefrom.
 Why are Auditing Standards important?

Auditing Standards are mandatory to be

by followed by practitioners under the
direction issued by the Council of ICAI.

Section 143(9) of the Companies Act, 2013

requires every auditor to comply with the
Auditing Standards.
COMPLIANCE

If not complied with Auditing Standards in

performing Assurance Engagement, CA
shall be held guilty of Professional
misconduct under Schedule-II to the
Chartered Accountants Act, 1949.
SA 200:
Overall Objectives of the
Independent Auditor and
the conductof anAudit in
Accordance with Standards on
Auditing.
 SA200:Overall Objectives of the auditor

(a) To obtain reasonable assurance whether

Financial Statements as a whole are free from
material misstatement, whether due to fraud or
error, thereby enabling the auditor to express an
opinion on whether the F.S. are prepared, in all
material respects, in accordance with an applicable
Financial Reporting Framework, and
(b) To report on the Financial Statements
and communicate as required by the SAs, in
accordance with the auditor’s findings.
CASE STUDY
 The Financial statements of ABC Limited are not ready for approval by the
Directors in the Board Meeting as auditor was unable to track the difference of
Rs. 50,00,000 in the financial statements. The management of ABC Limited is
of the opinion that the auditor shall be held responsible for the delay. Can the
management of ABC Limited do so?
 a. Yes, as the responsibility of audit is of the auditor and hence is liable for the
delay
 b. ABC Limited should request their auditors to suo motto withdraw from the
audit engagement expressing their inability to audit financial statements of the
client.
 c. No, the responsibility for preparation and presentation of financial
statement is that of management and the audit of financial statements does
not relieve management of its responsibilities.
 d. Yes, but the responsibility lies between both management and the auditor.
 Answer: (c)
STANDARDS ON AUDITING
 SA 230. AUDIT DOCUMENTATION
 SA 240. THE AUDITOR’S RESPONSIBILITIES
RELATING TO FRAUD IN AN AUDIT OF FINANCIAL
STATEMENT
 SA 250. CONSIDERATIONS OF LAWS AND
REGULATIONS IN AN AUDIT OF FINANCIAL
STATEMENTS
 SA 300. PLANNING AN AUDIT OF FINANCIAL
STATEMENTS
 SA 500. AUDIT EVIDENCE
 SA 700. FORMING AN OPINION AND REPORTING ON
FINANCIAL STATEMENT
THANK YOU