The corporate affairs ministry has asked cost auditors to focus on potential risk areas, evaluate the impact of cost inefficiencies on companies’ financial health and take advantage of artificial intelligence (AI) to plug loopholes.
The use of AI would help cost auditors “identify patterns or anomalies that might otherwise go unnoticed,” according to the ministry’s latest communication to stakeholders, reviewed by ET.
Cost records of companies are essentially books of accounts relating to expenses on materials, labour and other items used for producing goods or rendering services, in sync with Section 148 of the Companies Act. Currently, the cost audit rules cover 39 sectors.
The cost accounts are crucial for tax computation and obtaining funds for government project execution or subsidies and incentives under various official programmes.
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