The basic nature of audit is checking, and it holds good for both the cost audit as well as the financial audit.
However, the following are the points of difference between these two audits:
Financial Audit | Cost Audit |
It is statutorily compulsory under Companies. | It is not compulsory except in certain cases. |
It covers all the financial transactions recorded in financial books and financial records. | It covers only cost records and cost accounts. |
It aims to examine that business transactions have been recorded correctly. | It aims to verification of cost accounts and ensures the plan prepared in this connection has been duly executed. |
It is concerned with the past and history. | It concerned with a forward-looking approach. |
Reporting the true and fair view of the company’s earnings and state of affairs. | Cost Auditor is required to report to the management except for statutory audits. |
The financial aspect of the accounts is a matter of concern. | The cost aspect of the account is of main concern. |
It is concerned with the scrutiny of reliability or otherwise of transactions. | It is concerned with the propriety and efficiency of the transactions. |
The financial audit is primarily concerned with serving the interests of the shareholders. | 8. The cost audit is concerned with serving the interests of the management. |
The role of the financial auditor is in the office. | The role of the cost auditor is in the factory. |
A financial audit is conducted every year. | Cost audit may be done in the year in which it is required by the government or any other agency. |
In a financial audit, an auditor has to check the exact value of the closing stock for the balance sheet. | In a cost audit, an auditor has to check the adequacy of the stock, keeping in view the needs of the concern. |
In the financial audit, the report is submitted to the management to be laid in the general meeting of the shareholders. | The report of the cost auditor is submitted to the company and also to the company law board. |