COST SYSTEM AUDITS

Cortell provides a cost system management service for clients. The objectives could be as follows and will be based on client requirements.

   The objectives

The objectives with a cost system audit is to provide a diagnostic review of the organization’s costing system and to inform management about:

1. The state-of-the-art of the costing exercise in their organization,
2. The extent to which this supports organizational objectives,
3. Expressing an opinion about the accuracy and practicality of the system
4. The suitability of technology
5. Expressing an opinion about the cost benefit of the system
6. The use of information from the system

Resulting from the cost system audit is a report about findings regarding the above and recommendations about improving the cost system and the use of information.

   Review

As part of the cost system audit the following review will take place:

• Organizational objectives and to what extent this has been supported by the costing system
• The organizational structure and the need for cost calculation in the various parts of the organization
• The cost structure and the treatment of costs in the costing system
• The appropriateness of the links of revenue streams to products, customers, channels, etc.
• The model design and its fit to the objectives and structure
• Data collection and system integration
• Reporting of results and methods of reporting
• Use of cost information
• Skill levels of people operating the system and using results
• Integration of performance measures into the costing system
• The frequency of cost calculation and its relevance to organizational objectives
• Cost of operating the system and perceived benefits
• Technical issues such as backups, maintenance to the system.