What is the difference between Financial Audit, Cost Audit and Management Audit?

The difference between Financial Audit, Cost Audit and Management Audit:

Financial Audit.

Main elements of Financial Audit are:

• It is an effort to ensure a true and fair view of the state of affairs of the company through the Profit and Loss Account and the Balance Sheet
• It is a process of verification of past records of accounting relating to the previous year.
• Its main aim is to detect errors and frauds.
• It uses the techniques of vouching, verification and valuation for the purpose of forming an opinion.
• It is a statutory audit.
• It is conducted regularly every year.
• It is a verification of transaction recorded in the books of accounts.
• It reports about the actual state of affairs pertaining to financial position as on a particular date.
• It begins where the work of accountancy ends.
• It is conducted by a qualified Chartered Accountant.

Cost Audit.

Main elements of Cost Audit are:

• It ensures that the cost accounting system followed in the concern serves as a true basis of ascertainment of cost of production.
• It takes into view the current system of cost computation.
• It examines the reliability of the system which produce cost information.
• It examines the records of materials, labor and other expenses as components of total cost of operation.
• It is an audit of cost ascertainment and control.
• It is conducted as per the Instructions issued by the Central Government.
• It evaluates economy and output.
• It confines itself to cost implications of operations.
• It covers both the records of actual expenses incurred as well as the estimated cost of material, labor and other items.
• It is conducted by a qualified Chartered or Cost Accountant with the prior approval of the Central Government.

Management Audit:

Main elements of Management Audit are:

• It examines the efficiency of almost every area of operation within the
  organization.
• It mainly applies its attention to future planning and performance.
• It is an attempt to assess efficiency and suggest its further improvement.
• It determines the adequacy of procedures and control adopted by the
  organization.
• It is a policy audit and efficiency audit but it is not a statutory obligation.
• It is conducted as per the needs and desires of the company.
• It examines systems, policies, performance and identify the weakness and suggest remedy.
• It is concerned with the performance profitability of the concern.
• It begins where the work of financial audit ends.
• It may be conducted by any independent expert or a consultant.