Question

What are
the advantage and disadvantages
of cost audit ?​

Answer 1

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Advantages of audit:-

• Cost audit reveals whether any of the products of the company are making losses.

• Cost audit ensures that the shareholders get a fair return on their investments.

Disadvantages of Cost Audit:-

• Holding a Cost Audit can be expensive.

• A Cost Audit can be a long process which will likely involve more time.

Answer 2

Answer:

Here is. your answer

Explanation:

Disadvantages of Cost Audit:

1. Holding a Cost Audit can be expensive. This is because a company will often bring in an independent auditor who are normally charging higher price.

2. A Cost Audit can be a long process which will likely involve more time. This extra time and effort can impact an employee's day to day routine work.

3. If a Cost Audit is carried out in order to find fraudulent activity it can take a long time by which time people stealing could have covered their tracks.

4. Cost Audits involve a large amount of estimation and so there is the possibility that figures will be incorrect and if record keeping from the company is not good to start with then inaccuracies will be arises.

Advantages of Cost Audit:

1. Cost audit helps in detection of errors and frauds.

2. The management gets accurate and reliable data based on which they can make day-to-day decisions like price fixation.

3. It helps in cost control and cost reduction.

4. It facilitates the system of standard costing and budgetary control.

5. It helps the management in inter-unit / firm comparison.

6. It enables the management to identify loss making propositions.