Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: empanelment :: cpt :: Central Excise rule to resale the machines to a new company :: VAT RATES :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: VAT Audit :: list of goods taxed at 4% :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd
« Auditing »
 Auditing to be less of a burden as accountants embrace AI
 CAG's report on GST will be totally paperless
 Time Limit For Completion Of Assessment From The Date Of Special Auditor’s Report Under Income Tax Act, 1961
 Provisioning pertaining to Fraud Accounts
 Tax Audit Report (TAR) Certain exceptions and increased limits according to number of partners and considering nature of activity are desirable
 Cost Auditing Standards [ Cost Audit Documentation (102)] – Part-II
 Conference on Companies Act gets under way
 New bureau to dissolve state-run banks' power to choose auditors
 Foreign Exchange Management (Permissible Capital Account Transactions) (Fourth Amendment) Regulations, 2015
 ICAI forms 'prima facie' view on NSEL auditor
 Firms appoint new auditors in shift to meet new standards
 Cadre restructuring in I-T dept may open scrutiny of closed cases
 RBI issues new guidelines on concurrent auditing at branches
 RBI issues new guidelines on concurrent auditing at branches
 Digital India, smart cities projects catch the eye of IT companies

Cost Auditing Standards [ Cost Audit Documentation (102)] Part-II
January, 12th 2016

Cost Auditing Standards [Cost Audit Documentation (102)] – Part-II

1.Introduction : In continuation of our effort to make notified Cost Auditing Standards readable, next in line is theCost Auditing Standard on Cost Audit Documentation (102). The governing idea behind this standard immediately put in place after Standard on “Planning an Audit of Cost Statements (101)” is to place guidance on the documentation requirements relating to evidences leading up to the formation of opinion by the auditor. It is important to understand that a framework of compliance was already applicable through “Guidance Manual for Audit Quality” by the QRB of the Institute of Cost Accountants of India prior to 11th September,2015, the effective date of implementation of this standard. For the sake of better appreciation of this standard, relevant part of the extract has been also incorporated in our discussion.

2.The Objective: of this Standard (Cost Audit Documentation -102) is to guide the members to prepare documentation that provides:

(a) A sufficient and appropriate record of the basis for the Cost Auditor’s Report; and

(b) Evidence that the audit was planned and performed in accordance with Cost Auditing Standards and applicable legal & regulatory requirements.

Though This Standard deals with the cost auditor’s responsibility to prepare audit documentation for the audit of cost statements, records and other related documents. The specific documentation requirements of other Cost Auditing Standard's do not limit the application of this Cost Auditing Standard. Laws or regulations may establish additional documentation requirements. Meaning that the words “sufficient and appropriate” is to be considered objectively and spirit of the standard requirements should be maintained instead of limiting implementation of the standard exclusively based upon compliance.

Another very interesting aspect comes out from the plain reading of the standard is, intent of the regulator to put in place peer review mechanism. For the record, peer review is not yet implemented by the regulator but as discussed, seems inevitable.

3. Requirements: envisaged in this standards:

  • The cost auditor as part of the audit documentation shall record audit procedures performed, relevant audit evidence obtained, and conclusions reached. (Refer 6.1)
  • The Cost Auditor shall prepare audit documentation that is sufficient to enable another competent person, having no previous connection with the said audit, including person undertaking peer review to understand:

(a) Conformance of audit procedures performed with legal and regulatory requirements;

(b) Conformance to Cost Auditing Standards. (Refer 6.6)

(c) The results of audit procedures performed

(d) The audit evidence obtained

(e) Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions. (Refer 6.7 & 6.8)

  • The Cost Auditor shall record the discussions of significant matters with client personnel and outsiders.(Refer 6.9).
  • The Cost Auditor shall record any departure from the standard requirement in a Cost Auditing Standard. (Refer 6.11)
  • In documenting the nature, timing and extent of audit procedures performed, the Cost Auditor shall record the characteristics of the specific items or matters tested, the persons responsible for performing and reviewing such procedures with relevant dates and extent of review.(Refer 6.12)
  • The Cost Auditor shall prepare audit documentation on a timely basis. (Refer 6.14)
  • If, in exceptional circumstances, Cost Auditor performs any new or additional audit procedures or draws new conclusions, after the date of Cost Audit Report, then he shall document such circumstances and details of such procedures performed.(Refer 6.15)
  • The cost auditor shall assemble the audit documentation in an audit file.(Refer 6.16)

4. Some important and relevant terms / definitions used in the standard are :

  • Audit documentation: Audit Documentation means the records, in physical or electronic form, including working papers prepared by and for, or obtained and retained by the Cost auditor, in connection with the performance of the audit.
  • As per Manual on QRB which is applicable on auditors in such audit and relevant here [ “ Audit documentation refers to the record of audit procedures performed, relevant audit evidence obtained, and conclusions reached by the auditor.
  • Audit documentation is required as sufficient and appropriate record of the basis for the Auditor’s Report and providing evidence that the audit was planned and performed as per the audit plan and complying with legal & statutory requirements.
  • The auditor shall document discussions of significant matters, when and with whom the discussions took place.
  • The firm should establish its policies and procedures for audit documentation. Audit documentation should be completed “in time” even though no time limits as such are normally prescribed by any statute. It may be considered to be a good practice to complete audit documentation within a period not exceeding 45/60 days from the date on which the audit report is rendered. In case of statements are authenticated / certified by practicing cost accountant, the period may be restricted to 15 days from the date on which certificate is signed.
  • The audit documents should have self-custody, easy but protected accessibility. If the data / information / audit evidence is in electronic form, it must be retrievable only with proper authorization. The real test will be the full confidentiality. A safeguard should be taken so that the documentation or audit evidence is not altered, or additions or deletions made without the knowledge Page 51 of 68 of the proper authority. The documentation should be fully protected from physical loss or damage. The electronic documents should have proper and safeguarded password protection and back up mechanism. The audit documents should be divided in sections and properly indexed with serial numbers.
  • The audit documentation should be retained depending upon the relevance and significance of the same in relation to the matter authenticated or certified by the auditor. Normally the audit documentation should be retained for a minimum period of 5 years from the date of signing the report. However, the legal provisions or regulations will override the firm’s policy regarding the retention of such documentation e.g. TheCompanies Act, 1956 section 209 (4A) provides for retention of the accounting records for a period of not less than 8 years immediately preceding the current year. Even though the obligation is on the companies, a corollary follows that the auditors should also keep the audit documentation for the corresponding period.
  • The audit documentation shall be sufficient to enable an experienced auditor, having no connection with the audit of specific entity, to understand the nature, timing and extent of audit procedures performed, compliance with cost accounting standards and other legal and regulatory requirements, the result of audit procedure performed, audit evidence obtained, significant matters arising out of audit and how they were addressed and audit conclusions reached with the underlying professional judgments for reaching such conclusion.
  • In the process of audit documentation, the auditor shall record;

a) Identifying characteristics of specific items including cost items, cost records, other items and matters tested.

b) Who performed audit work and date.

c) Who reviewed audit work with dates of review.

d) Discussion of significant matters with the management or those in charge of its governance, nature of significant matters and when and with whom discussion took place.

e) Information, if any, about any significant matter that is inconsistent with overall Audit Report and how the inconsistency was addressed.

f) Departure, if any, in an exceptional circumstance, from a relevant requirement specified in any standard/stipulation prescribed by ICWAI/regulatory authority, reasons for such departure and how Page 52 of 68 application of an alternative audit procedure fulfilled the requirement. ]

  • Audit file: Audit file means one or more folders or other storage media, in physical or electronic form, containing the records that comprise the audit documentation for a specific Assignment or audit.
  • Audit working papers: Audit working papers are the documents which record all audit evidence obtained during audit. Such documents are used to support the audit work done in order to provide assurance that the audit was performed in accordance with the relevant Cost Auditing Standards.


Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Portal Design Website Design Portal Designing Website Designing Web Design Professional Portal Design Professional Website Design Professional Web Design Portal Design India Website Design India Portal Designing India Website Designing India Web Design India Professional Portal Design India Professional Website Design India Chicago Professional Web Design New York Professional Web Design California Website Design Florida Website Design New Jersey Website Design Britain UK Website Design London Manchester Website Design

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions