Contemporary Audit

Cost Audit: Cost Audit means the checking and

verification of the cost accountancy books,
records, statements, reports and other data
related to the cost of a product of service being
provided by a business unit. Institute of Cost and
Works Accountants of India (ICWAI) cost audit is
‘‘an audit of efficiency of minute details of
expenditures while the work is in progress and not
a post mortem examination. It is mainly a
preventive measure
DIFFERENCE BETWEEN COST AND FINANCIAL
AUDIT:
• Financial audit is the audit of the financial books
of accounts and it is undertaken by a Chartered
Accountant who is appointed by shareholders of
the company. As per the provisions in the
Companies Act. Whereas Cost audit is the
verification of the correctness of cost accounts and
adherence to the cost accounting principles, plans
and procedures. Cost audit is done by the Cost
Accountant having the practicing certificate issued
by the ICWAI
 Environmental Audit

• Environmental audit has been defined as ‘A

management tool comprising a systematic,
documented, periodic and objective evaluation of how
well organizations, management and equipment are
performing with the aim of contributing to
safeguarding the environment by facilitating
management control of environmental practices and
assessing compliance with entity policies which would
include meeting regulatory requirements and
applicable standards ‘Environmental issues cannot be
ignored by external auditors.
 Social Audit

• A social audit is a formal review of a company's

endeavors in social responsibility. A social audit looks
at factors such as a company's record of charitable
giving, volunteer activity, energy use, transparency,
work environment, and worker pay and benefits to
evaluate what kind of social and environmental
impact a company is having in the locations where it
operates. Social audits are optional. Companies can
choose whether to perform them and whether to
release the results publicly or only use them internally
 Management audit

• is mainly concerned with the appraisal,

assessment or evaluation of all the functions
of management. Keeping in mind the profit
earning target of management,
management audit focuses on weakness,
inefficiencies or inabilities in discharging of
the functions and functional areas of
management.
 Objectives of Management Audit

• To formulate goals
• To warrant goals achievement:
• To evaluate organization structure:
• Right man at the right job:
• To suggest improvements:
• To ensure the compliance of legal and regulatory
provisions:
• To reduce cost:
 Tax Audit

To discourage tax avoidance and evasion, the

requirement of a tax audit was introduced by
the Finance Act of 1984, by inserting a new
section “44AB
A Tax Audit involves an expression of the tax
auditors' opinion on the truth and correctness of
certain factual details, given by assesse to the
Income Tax Authorities to enable an assessment of
tax
 Purpose of Tax Audit

Ensure that the books of accounts and other

records are properly maintained
Faithfully reflect the income of the tax payer and claims for
deduction correctly made by him;
Help in checking fraudulent practices;
Facilitate the administration of tax by a proper presentation of
accounts before the tax authorities and considerably saving the
time of assessing officers in carrying out routine verifications
like checking correctness of totals and verifying whether
purchases and sales are properly vouched or not, thereby their
time could be utilized for attending to more important
investigational aspects of the case.
 Penalties

section 271-B of the Income Tax Act says that “If any
person fails to get his accounts audited in respect of
any previous year or years relevant to an assessment
year of years and furnish a report of such audit as
required under section 44 AB, the Assessing Officer
may direct that such person shall pay, by way of
penalty, a sum equal to one-half percent of the total
sales or The maximum penalty which may be
imposed under this section is Rs.1,00,000