Liabilities Auditing Help

A cost auditor, while examining the cost accounting records is required to exercise, reasonable care and skill. What is reasonable  are and skill, depends on the circumstances of each case. If an auditor does not take reasonable care and does not exercise skill, failing in his duty as a cost auditor even in one instance, he would negligent if not worse.

An auditor is not bound to be a detective His role becomes amply clear with the discussion of professional competence and professional ethics in Chapter III of this Handbook. However, failure on the part of an auditor makes him jointly and severally liable with those who are responsible for the management of the company.

Penalty for non-compliance:

A cost auditor has to comply with the provisions of the Companies Ordinance to avoid any penalty. Sub-sections (1) and (2) of Section 260 of the Companies Ordinance, 1984 read:

“(1)If any auditors report is made, or any document of the company is signed or authenticated otherwise than. in conformity with the requirements of section 157, section 255 or section 257 or is otherwise untrue or fairs to Grill out material facts about the affairs of the company or matter to WhiCh it purports to relate, the auditor concerned and the person, if any, other than the auditor, who signs the report or signs or authenticates the document, and in the case of a firm, a{{partners of the firms sliant if the default is wi{{fu{{, GepunishaGCewitft fine which may extend’ to two thousand’ rupees.” “(2) If the auditors report to which sub-section (1) applies is made with the intent to profit such auditor or any other person or to put another person to a disadvantage or toss for a material consideration; the auditor staff,in addition. to the penalty provided by that sub-section, be punishable with imprisonment for a term which may extend’ to six; months ana witfi fine which may extend to two thousand’ rupees.”

Posted on November 4, 2015 in Cost Audit

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