Generally, an annexure to cost audit report contains the following matters:
- Name and address of the concern/firm.
- Date of the company’s registration.
- Types of company i.e. public or private.
- Brief description of the company’s function.
- Location of the factory.
- Opening date of commercial production.
- Types of accounts.
Cost Accounting System
Here the cost auditor mentioned whether the accounts are maintained according to the GAAP or cost accounting system. Generally, cost accounting methods include-
- Cost accounting system regarding materials.
- Cost accounting system regarding labor.
- Depreciation, overhead, and its allocation on production cost.
- The condition of by-product, joint product, etc.
- Capital employed.
- Net worth.
- Profit before tax.
- Expenses to be specified.
- Income to be specified.
It includes the data/information on the basis of each type’s product such as-
- The license of production capacity.
- Machines capacity.
- Uses of the machine and actual production.
- Machine capacity and the ratio of uses.
- Process of manufacture.
- Raw materials.
- Power & Fuel.
- Wages & Salaries.
- Stores & Spare parts.
- Royalty / Technical aid payments.
- Abnormal non-recurring costs.
- Other items.
- Auditors’ observations and conclusions.
Cost Audit Report
On completion of the audit, an auditor has to submit his audit report incorporating a certificate regarding the correctness or otherwise of accounts along with his suggestions, if any, for improvements in the operation.
The report should be concise and submitted to the appropriate authorities at the right time to be of effective use to the parties concerned. It should comply with statutory provisions if any.
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