Question

Difference between cost audit and management audit

Answer 1

Management Audit deals with verifying the effectiveness and efficiency of the company’s management. Basically, you audit the decisions taken by the management. Say, management of the company took an ‘X’ decision on a particular matter, now auditors would try and verify the effectiveness of this decision and question the management in case of any suspicion.

Whereas, Cost Audit comprises of the verification of the cost accounting records such as the accuracy of the cost accounts, cost reports, cost statements, cost data and costing techniques and examination of these records to ensure that they adhere to the cost accounting principles, plans, procedures and objectives. It can be done on behalf of the management, customers, government, or done by trade associations or for statutory purposes.

Answer 2

Question

Difference between cost audit and management audit

Definition

Audit is the conduct of official inspection on a given aspect of life in a company, this can either be cost audit or management audit.

Differentiation

Cost audit is the official search and verification of the cost of purchase and payment of given items in the company or an organization.

This is conducted to ensure the checks and balances matches the requirement of the expenditure guideline in a company.

On the other hand , Management audit is the official verification, confirmation and search to the performance of the individual occurrence and performance.

For instance if an employee is involved in a corrupt aspect , the official audit will be done on the individual employee.