1.

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 fundamental principles governing the professional responsibility of the Cost Auditors are enumerated as follows:a. independence;b. integrity;c. objectivity;d. professional competence and due care;e. confidentiality;f. professional behaviour; andg. technical standards (a) the establishment of contract cost estimates and prices under contracts awarded on the basis of competitive proposals where the award may not be based on adequate price competition ( 3-503); sole source procurement ( 3-205); statutory professional services ( 3207); and architect- engineer and land surveying services ( 5-100); (b) the establishment of price adjustments for contract changes, including contracts that have been let on the basis of competitive sealed bidding or otherwise based on adequate price competition; (c) the pricing of termination for convenience settlements; and (d) any other situation in which cost analysis is used.

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 for all the companies. Only in the case of manufacturing or mining companies they have been specifically asked by the central government to maintain cost accounts under section 209 and get those accounts audited under section 233b. 2. Purpose The purpose of the financial audit is to report on the profit and loss account and balance sheet as to whether they show true and fair view of the business or not. The purpose of the cost audit is to certify that whether the expenditure incurred on the production of items has been incurred prudently or not. 3. Expression of opinion The financial auditor has to comment upon the accuracy of t he transactions recorded and the cost auditor has to comment upon the correctness and wise ness of the decisions taken in production of items. 4. Instance Financial audit is conducted at the instance of the shareholders.

Cost audit is done at the requirement of third parties like government, industrial organizations etc. 5. Appointment Financial audit is appointed normally by the shareholders in the general meeting whereas the board of directors with the previous approval of the central government appoints a cost auditor. 6. Recurrence Financial audit is conducted every year whereas a cost audit may be done in the year in which it is required by the government or any other agency. 7. Stock In financial audit auditor has to check the exact value of closing stock for the purpose of balance sheet, whereas in the cost audit the auditor has to check the adequacy of the stock keeping in view of the needs of the concern. 8. Report In the financial audit the report is submitted to the management t o be laid in the general meeting of the shareholders, the report of the cost auditor is submitted to the company and also to the central government within 180 days from the end of the companys financial year to which the cost audit

2. A management audit can be defined as an audit which analyzes the effectiveness of the management team of a company. The purpose of this is seven-fold: understand current practices, relate these to company financials, suggest new procedures which will improve the efficiency of managers, present a financial gain related to these new procedures, and create benchmarks and projections for the future. I. Marketing Audit 1. Marketing Function such as procurement, distribution, promotion, pricing, etc.

2. Marketing and sales report generation procedures 3. Pricing strategy 4. Customer relationship management. 5. Branding activities 6. Designing & Conducting of training program for Distribution channel. 7. Incentive Schemes for Dealers, Stockiest, Distributor, Salesmen 8. Policy Formulation for Dealers, Distributor, Customer

9. Sales Force Skill set rating & Competency Mapping 10. Marketing And Sales Promotion 11. Identifying & facilitating new business opportunity

II. Planning, Scheduling and Control system Audit Management Information System Modules. Supply Chain Management Control procedures formats for generation of reports. Stock Audit/Physical Verification

III. General audit Yourself Strategic Planning Planning For Growth Organizational Structure Office Filling and Record Management System.

IV. HR Audit HR Policies Employee Handbook Customer Satisfaction Survey Role Identification & Climate Study Compensation structure Performance Appraisal

System Introduction & Process Study Job Description and Specification Tasks & Duties of employees Documentation Verification Conflict management & problem solving Personal Counseling for motivation & stress reduction Planning for Proactive Organizational Structure