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CMA Final · Cost and Management Audit · Basics of Cost Audit

Which of the following correctly describes the scope of SCA 103 on the overall objectives of the independent cost auditor?

SCA 103 sets out the cost auditor's overall objectives in auditing cost statements under the cost auditing standards. It also describes management's responsibility for preparing and presenting the cost statement, identifying the cost reporting framework and laying down cost accounting policies.

  1. AIt prescribes the rates of remuneration payable to a cost auditor
  2. BIt lists the classes of companies required to maintain cost records
  3. CIt establishes the cost auditor's overall objectives when auditing cost statements in accordance with cost auditing standards, and describes management's responsibility for preparing and presenting the cost statementCorrect
  4. DIt deals only with the internal audit of company functions under section 138

Explanation

The scope paragraph of SCA 103 states that it establishes the overall objectives of the cost auditor while auditing cost statements under the cost auditing standards. It also describes management's responsibility for the cost statement, the cost reporting framework and cost accounting policies. Remuneration and applicability are not its scope.

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