Cost Audit verses Financial Audit

[usman shahid]

I dont understand one thing when cost of production is almost 85% of sales and profit is just round about 10% then why the auditors stress so much on the 10% and ignore the 85%.....

Importance of Cost Audit must be realized.......

Usman-icma finalist

[Evolution]

You wanna know y the profit figure is so given a great deal of importance by the auditors? The primary reason is that auditors are appointed on behalf of the shareholders and the key figure for shareholders is the profitability of the company. Put your self in an investor's shoes. What is more important for you, the cost of sales and other expenses or how much profitable the company is and what dividends it will pay which is ofcourse appropriation of profit.

[smraza]

Dear Usman,
who says that the auditors ignore the cost during their audit, i think u dont have the idea of audit, there is no link of audit with the profit or loss of the company (except for the major deviations from preceding years), audit simply increase the realiability of the financial statements that whatever information is being presented in the F/S gives a true and fair view. However cost audit, on the other hand, carries its own importance and in pakistan some manufacturing units are legally required to get their records cost audited, e.g. Ghee Mills, Sugar Mills etc.

SMR

[jbladeus]

No offence, but I guess Usman was seing it from his own perspective, that is the cost auditor's one, he is an icma finalist u know.

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Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!