METHODOLOGICAL ASPECTS OF AUDIT OF ACCOUNTING OF PRODUCTION COSTS IN CONSTRUCTION ORGANIZATIONS

Abstract

 The methodological aspects of product costing and product costing audits in construction organizations are critical to ensuring financial accuracy and accountability. Auditors focus on several key areas during this process. First, they evaluate the adequacy of internal controls related to cost accounting, ensuring that the procedures for recording, classifying, and reporting costs are reliable. Auditors then evaluate the accuracy of cost allocation methods, including direct and indirect costs, ensuring that all production related costs, such as labor, materials, and overheads, are appropriately allocated to specific projects. They also review compliance with relevant accounting standards and regulations, ensuring that product costing is consistent with industry practice. In 
addition, auditors review documentation and records related to cost accrual, verifying the accuracy of invoices, contracts, and timesheets. This includes conducting substantive testing to ensure that reported costs are supported by appropriate evidence. Finally, auditors provide recommendations to improve cost management practices, increase transparency, and reduce the risk of financial discrepancies. Due to these methodological aspects, auditors play an important role in helping construction organizations to accurately record the cost of production and facilitate informed decision-making