Page 157 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes
Format of Cost Audit Report
I ………………………………………… …………………… (Name of cost auditor) Appointed
as auditor of ……………………………………………………………… (Name of the company)
in pursuance of provisions of the Companies Act, 1956 under section 233-B, the books of
account maintained by the company pursuance to the rules made by the Central
Government under section 209 (1) (d).

I have conducted my-lour audit in accordance with the provision of this section and report
that:
(a) I have obtained all information and explanations which to the best of my knowledge
and belief were necessary for the purpose of audit.
(b) In our opinion, proper cost account records required under section 209(1) (d) of
Companies Act, 1956 have been kept by the company.

(c) The required statements of the branches which are not audited by us have been
received for the purpose of our audit/not received or available for our audit.
(d) In our opinion, the cost accounts books give the information required by the
Companies Act, 1956.
(e) In my opinion, the cost audit records kept by the company in the properly manner
with a true and fair view of cost of manufacturing and marketing.
With cost report, we are also enclosing notes and various policies of the company which
is part of our audit report and these points are considered in our investigations.
Date: …………………… ……………………
Place: …………………… Signature of Cost Auditor

The Cost Audit Reports have great potential in government procurements especially in case of
non-competitive procurements. There are no effective antitrust laws in India. This always leaves
a scope for the traders/suppliers to charge exorbitant prices from the government supplies.

Example: ‘Clayton Act’ in USA clearly provides that any discrimination in price, services
or facilities shall be unlawful in USA. It also prohibits the discrimination in rebates, discounts or
underselling in particular localities. This ‘Act’ further provides that any differential in prices
etc., shall have to be justified on the grounds of differences in the cost of manufacture, sale or
delivery resulting from the differing methods or quantities in which such commodities are sold
or delivered and the burden of rebutting the prima-facie case shall be upon the person charged
with a violation of this act. The ‘Clayton Act’ also provides that it shall be unlawful for any
person to induce or receive discrimination in price, which is prohibited under the act. In other
words, each seller of product or service can charge a uniform price only in the USA.

Task Write a note on the cost audit in India.

Self Assessment

Fill in the blanks:
13. Section …………………… of the companies act provides for ordering of cost audit by
Central Government.

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