Final answer:
Auditors test a client's cost accounting system to ensure costs are accurately recorded and reported, allocate costs systematically, and comply with financial reporting standards.
Step-by-step explanation:
When an auditor tests a client's cost accounting system, the tests are primarily designed to determine that the system accurately records and reports costs, ensures that costs are being allocated in a consistent and systematic manner, and that the company's reported costs are in accordance with the applicable financial reporting standards and regulations.
To carry out this assessment, auditors might examine various documents such as invoices, reconcile production costs with cost reports, and evaluate the procedures the company uses to assign costs to products or services.
The auditors' objectives are to ensure cost allocation is reasonable, expenses are classified correctly, and that the company's financial statements give a true and fair view of its financial position regarding cost management.