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CMA Final · Cost and Management Audit · Cost Audit Programme

A cost auditor signed the Cost Audit Report of Bharat Alloys Ltd. on 10 August. On 20 August the auditor learns of a fact that, had it been known earlier, would have caused the cost statements to be changed or the report modified. According to SCA 102, what should the cost auditor do regarding documentation?

The cost auditor should add the newly known facts to the cost audit documentation and review the resulting changes just as the original documentation was reviewed. SCA 102 does not allow ignoring such facts because the report is signed, nor replacing earlier working papers.

  1. AIgnore it, since documentation is closed on the report date
  2. BAdd the facts to the cost audit documentation and review the resulting changes as the original documentation was reviewedCorrect
  3. CDestroy the earlier working papers and prepare fresh ones
  4. DRecord the facts only in management's representation letter

Explanation

Para 6.15 of SCA 102 requires facts becoming known after the report date, which would have changed the statements or report, to be added to the documentation. The resulting changes must be reviewed like the original documentation. Closing documentation or destroying papers contradicts this.

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