As internal auditor, you have been asked to review an entity's control over cost. You determine that this means you must review the adequacy of cost accounting. You proceed to outline what you believe are the most important purposes of cost accounting:

• To enable all levels of management to localize and measure inefficiencies so that costreduction efforts can be applied intelligently.

• To produce accurate product costs so that management can set sales prices and policies and plan efficient production schedules.

Required:

What should you do to assess the adequacy of the cost accounting function? Be specific as to the audit procedures that you would perform to gather the evidence required to support conclusions in an audit report.