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CMA Final · Cost and Management Audit · Cost Audit Documentation, Audit Process and Execution

A cost auditor of a small manufacturing unit explains to the reviewer orally that stock counts were satisfactory but has no written record of the procedures performed. Based on SCA 102, what is the position?

Oral explanations by the cost auditor cannot substitute for audit documentation. SCA 102 requires documentation to be sufficient and appropriate, so the absence of a written record of the procedures performed is a deficiency even for a small unit.

  1. AOral explanations by the cost auditor cannot substitute for sufficient and appropriate documentationCorrect
  2. BThe oral explanation is adequate if the reviewer accepts it
  3. CThe oral explanation is adequate for smaller entities
  4. DThe oral explanation suffices if the entity management confirms it in writing later

Explanation

SCA 102 requires audit documentation to be sufficient and appropriate and says oral explanations by the cost auditor cannot substitute for it. Smaller-entity relief covers only the level of detail, not the need for documentation.

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