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Cost Audit and Assurance Standard on Planning an Audit of Cost Statements

CAAS - 101 - Rule - Companies Law - CAAS - 101 - CAAS - 101 The following is the Cost Audit and Assurance Standard (CAAS 101) on "Planning an Audit of Cost Statements". In this Standard, the standard portions have been set in bold italic type. This Standard should be read in the context of the background material, which has been set in normal type. 1. Introduction Planning an audit of cost statements and other related information is considered necessary to ensure achievement of audit o .....

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pare and document the audit plan. While preparing the audit plan, consideration shall be given to the availability of skilled audit personnel available, time frame for completion of the audit, nature and the complexities involved, risk assessments and audit tests to address those risks. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Audit: An audit is an independent examination of financial, cost and other related information of an entity wheth .....

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he risk of material misstatement has two components viz. Inherent Risk and Control risk. a. Inherent risk - the susceptibility of an assertion about the measurement, assignment or disclosure of cost to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls. b. Control risk - the risk that a misstatement that could occur in an assertion about the measurement, assignment or disclosure of cost and that cou .....

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dit Strategy sets the scope, timing and direction of the audit, and guides the development of the detailed audit plan. 4.5 Cost Audit: Cost audit is an independent examination of cost records and other related information of an entity including a non-profit entity, when such an examination is conducted with a view to expressing an opinion thereon. 4.6 Cost Auditor: "Cost Auditor" means an auditor appointed to conduct an audit of cost records, under sub-section (2) of section 233B of th .....

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dit partner. 4.7 Audit Partner: Audit partner means the partner or other person in the firm who is a member of the Institute of Cost Accountants of India and is in full time practice and is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body. 4.8 Audit Team: Audit team means all personnel performing an engagement, including any experts cont .....

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o be in accordance with the applicable cost reporting framework. Misstatements can arise from error or fraud. Where the cost auditor expresses an opinion on whether the cost statements give a true and fair view, misstatements also include those adjustments of amounts, classifications, presentation, or disclosures that, in the cost auditor's judgment, are necessary for the cost statements to be presented fairly, in all material respects, or to give a true and fair view. 4.11 Risk Assessment: .....

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e units to be covered, product groups to be covered, scope of coverage where the regulations leave it to be agreed between the auditor and the client. For example matters to be covered in the Performance Appraisal. 2. The Cost Auditor shall formulate an overall audit strategy that sets the scope, timing and direction of the audit. The audit strategy guides the development of the audit plan. 3. Formulating the audit strategy the Cost Auditor shall consider all relevant factors. These include: a. .....

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ocedures and other activities. 5. The Cost Auditor shall update the audit strategy and the audit plan as required during the course of audit. 6. The Cost Auditor shall plan the nature, extent and timing of the direction and supervision of audit team members and the review of their work. 7. The Cost Auditor shall document the overall audit strategy, the audit plan and any significant changes made thereto and the reasons for the changes. 8. In the first year of audit, the Cost Auditor shall perfor .....

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disqualify him from continuing as Cost Auditor for the company. 2. Subsequent to his acceptance of the assignment, issues about management integrity may crop up that may affect the auditor's willingness to continue the engagement. 3. The above checks must be completed prior to the performance of other significant activities for the current year's audit. 4. Matters that are relevant in formulating audit strategy and drawing up the audit plan include in addition to those mentioned earlier .....

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ndustry. e. Reliance that can be placed on the work of financial auditors, other cost auditors appointed by the entity and internal auditors for example their attendance in annual stocktaking. f. State of IT implementation, whether the entity is using an ERP system or internally developed systems and the reliance that can be placed on them. g. Statutory timelines for cost reporting which can be modified by managements for early completion. h. Timelines for Board/audit committee meetings which ca .....

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