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TMI BlogCost Audit and Assurance Standard on Planning an Audit of Cost StatementsX X X X Extracts X X X X X X X X Extracts X X X X ..... and securing coordination with the client on audit work. 2. Objective The objective of this Standard is to guide the members in planning for the audit of cost statements so that it is performed in an effective manner. Audit planning shall also include establishing audit strategy for the conduct of the audit. 3. Scope This Standard deals with the auditors' responsibility to plan an audit of cost statements and other related information. The auditor shall prepare 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the cost auditor to reduce audit risk to an acceptable low level will not detect a mis-statement that exists and that could be material, either individually or when aggregated with other misstatements. 4.4 Audit Strategy: Audit 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 the Companies Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: Risk Assessment is the overall process of risk analysis and risk evaluation. 5. Requirements 1. Prior to entering the planning phase, the Cost Auditor shall: a. Ensure that the appointment as cost auditor is proper, that he has received the letter of appointment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 perform procedures regarding the acceptance of the client relationship and the specific audit and communicating with the previous auditor. 6. Application Guidance 1. After the Cost Auditor has accepted the appointment for a company, there may be changes in his position in relation to the company that impede his arm's length relationship with the company. It may happen that an assignment subsequently handled by him for the client, for example, design and implementation of Cost Accounting Syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meetings which can set the time limits for completion of audit work. i. Resources required and available in terms of manpower, equipment and others and the assignment of these to specific parts of the work. 5. The nature and extent of planning activities will vary according to the size and complexity of the entity's activities, the number of products to be covered, the processes and operations involved. 6. The nature and extent of planning activities also depend on the audit team members' previous experience with the entity and the industry. 7. Planning is not a discrete phase of an audit, but rather a continuous and iterative process. Since audit plans get modified by developments during the execution of the plan. 8. Planning ..... X X X X Extracts X X X X X X X X Extracts X X X X
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