Audit is the task of careful and in detail checking or examining of cost & financial statements from company or organization to make sure that they are correct and complete, or a report that showing the results of this check.
Financial Audit is the examination of financial records and business accounts by an independent body which is conducted for compliance, taxation or for disclosure purposes and ensures high accuracy in the given reports.
Cost Audit is the verification of accounts and cost records, and a careful compliance to cost accounting process.
Difference between Financial Audit and Cost Audit
|Financial Audit||Cost Audit|
|1. Financial audit is mandatory for all companies registered under Companies Act, 1956.||Only in case of companies involved into manufacture or mining business and required to maintain Cost Accounts as per Section 209.
|2. The financial audit is done to report on the financial data, consisting of a statement of balance sheet and profit and loss to ensure fairness of business perspectives.||Cost audit is done to certify after careful examination or checking of reports on expenditure made on production of intended items.|
|3. Financial Auditor is appointed by shareholders.||Cost Auditor is appointed by the board of directors with the previous approval of the Central Government.|
|4. Financial audit is mandatory to be conducted every year.||Cost Audit is conducted in a year in which audit is required by the government.|
|5. Financial audit is done or conducted as per the demand of the shareholders.||Cost audit is done when government or industrial organization proposes to make an audit.|
|6. Financial auditor has to check or examine carefully and in detail the exact value of closing the stock for the purpose of balance sheet.||In cost, audit the auditor has to see whether there is sufficient stock maintaining in order to fulfill the needs of the business concern.|
|7. The financial auditors have to give their remarks about the exact expenditures shown on the record.||The cost auditors have to give their remarks about how correctly or wisely the decisions have been taken in production of items.|
|8. The finance auditor submits the report in annual general meeting organized by shareholders.||Cost auditor submits the report to the company and central government within 180 days from the end of financial year.|