CMA Final · Cost and Management Audit · Cost Audit Programme
Under SCA 103, when is a Cost Auditing Standard regarded as relevant to a particular cost audit, so that the cost auditor must comply with it?
A Cost Auditing Standard is relevant, and must be complied with, when it is in effect and the circumstances it addresses exist in the audit. Mere issuance is not enough, and compliance does not depend on management's request or a turnover judgement.
- AWhenever it has been issued, irrespective of the circumstances of the audit
- BWhen it is in effect and the circumstances addressed by the Standard existCorrect
- COnly when the company's management requests compliance in the engagement letter
- DWhen it is in effect and the cost auditor considers the entity's turnover to be material
Explanation
SCA 103 para 5.2 requires compliance with each relevant Standard, and a Standard is relevant when it is in effect and the circumstances it addresses exist. Issuance alone is not enough, and neither management's request nor a turnover test is the criterion.
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