CMA Final · Cost and Management Audit · Cost Audit Programme
As per SCA 105, the preconditions for a cost audit comprise:
The preconditions for a cost audit are management's use of an acceptable cost reporting framework in preparing the cost statements and its agreement to the premises on which the cost audit is conducted, as defined in SCA 105.
- AAppointment of a cost auditor by the Central Government and payment of fees in advance
- BUse by management of an acceptable cost reporting framework and agreement of management to the premises on which a cost audit is conductedCorrect
- CAvailability of a prior year cost audit report and a certified balance sheet
- DExistence of an internal audit department and a cost accountant on the staff
Explanation
SCA 105 defines preconditions as management's use of an acceptable cost reporting framework in preparing cost statements and its agreement to the premises on which the audit is conducted. The other options list items not named in the definition.
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