Cost Audit has both general and social objectives. The general objectives can be described to include the following :
Verification of cost accounts with a view to ascertaining that these have been properly maintained and compiled according to the cost accounting system followed by the enterprise.
Ensuring that the prescribed procedures of cost accounting records rules are duly adhered to.
Detection of errors and fraud.
Verification of the cost of each “cost unit” and “cost center” to ensure that these have been properly ascertained.
Determination of inventory valuation.
Facilitating the fixation of prices of goods and services.
Periodical reconciliation between cost accounts and financial accounts.
Ensuring optimum utilization of human, physical and financial resources of the enterprise.
Detection and correction of abnormal loss of material and time.
Inculcation of cost consciousness.
Advising management, on the basis of inter-firm comparison of cost records, as regards the areas where performance calls for improvement.
Promoting corporate governance through various operational disclosures to the directors.
